2 September 2020 | Canadian economist and former Bank of England Governor Mark Carney today launched a global taskforce to begin scaling Voluntary Carbon Markets, which are seen as key to accelerating the growth of carbon sinks and moving to net zero emissions.
The Taskforce on Scaling Voluntary Carbon Markets aims to grow markets at least fifteenfold and possibly much more.
In addition to Carney, who also serves as UN Special Envoy for Climate Action and Finance Advisor to UK Prime Minister Boris Johnson for COP26, the initiative is chaired by Bill Winters, Group Chief Executive, Standard Chartered and sponsored by the Institute of International Finance (IIF) under the leadership of IIF President and CEO, Tim Adams. Annette Nazareth, a partner at Davis Polk and former Commissioner of the U.S. Securities and Exchange Commission, will serve as Operating Lead for the Taskforce. McKinsey & Company will provide knowledge and advisory support.
“Companies and the investment community are increasingly focused on supporting the transition to a net zero economy and developing credible transition plans,” said Carney. “To achieve net zero, they will need to decarbonize and many will need to offset some emissions as part of the transition, creating a surge in demand for offsets.”
The goal is to harness the expertise of financial markets to build liquidity and increase transparency.
“Since the Paris Agreement was signed five years ago, one of the key elements to support its goals, an effective international carbon market, has been missing,” said Winters. “By scaling voluntary carbon markets and allowing a global price for carbon to emerge, companies will have the right tools and incentives to reduce emissions at least cost.”
In the coming months, the Taskforce will take stock of existing voluntary carbon markets and efforts to grow these markets, identify key challenges and impediments, build consensus on how best to scale up voluntary carbon markets and finally, present a blueprint of actionable solutions.
The Taskforce itself will be comprised of more than 40 leaders from six continents with backgrounds across the carbon market value chain. Participants bring expertise from the financial sector, market infrastructure providers, and buyers and suppliers of carbon offsets.
Voluntary carbon markets, a critical piece of emissions-reduction efforts world-wide, enable buyers to purchase credits that support emissions-reducing projects, thereby contributing to a smaller global emissions footprint overall.
GQ: Why does capitalism need to be reimagined, in your own words?
RH: Capitalism needs to be reimagined because it is not working for very large numbers of people on the planet. It is creating long-term damage that will cause immense harm to the planet and to our society. Our capitalism has been radically unbalanced and this makes it dangerous.
GQ: Your book is based on your popular course. Why did you create this course? How did it come about?
RH: About fifteen years ago, some of the world’s largest energy companies started showing up in my office. They could see the world was transitioning to carbon-free energy, and I had spent the first 20 years of my life studying large-scale strategic and organisational change. So I started working with these companies and discovered that the single thing most important to helping them change is some kind of tax or regulation on greenhouse gases.
Intuitively, when renewable energy comes out of your socket, it doesn’t look any different to fossil fuel energy and firms that sell fossil fuel energy do not pay for the very considerable cost that it imposes on society. If you take, for example, five cents worth of coal fired electricity, it creates another 4 cents worth of health damage and another 4 cents worth of climate damage on future generations – and these are conservative estimates. If we are to transition the whole world into carbon free energy, you need an incentive. You need regulation to accelerate the innovation we need and I became interested in why business wasn’t pushing for this regulation because climate change is a huge danger to the long-term stability of the business environment. So I started a course at HBS to really work with the students and think through for myself about what businesses can do to build a more sustainable world.
GQ: What are your thoughts on WEF founder Klaus Schwab’s stakeholder capitalism, especially given its many critiques?
RH: Part of the problem is that there are many definitions of stakeholder capitalism. If by stakeholder capitalism we mean paying attention to all your stakeholders as you make your decisions – employees, customers, suppliers and local communities – as a way of running a thriving business, I think that’s just good business.
If by stakeholder capitalism you mean changing the way in which firms are governed so that instead of responding only to investors, you have a legal responsibility to stakeholders, that can be an important way of addressing some of these issues, but it’s much more complicated than proponents of stakeholder capitalism sometimes seem to suggest. In Germany and Japan, for example, where firms are governed using a more stakeholder-friendly approach, it’s not simply that you change the rules by which corporations are run, but the entire society and many investors have signed onto the idea that corporations should focus on a wide range of stakeholders. When that’s the case, focusing on stakeholders can be powerful. But if you were to go to an ordinary corporation in other parts of the world, then the question is: who’s in charge?
The great risk is that managers can say they are managing for stakeholders even as they buy themselves another corporate jet. For firms that are committed to stakeholders and have adopted clear measures of what that means and investors are totally on board, that can be powerful.
My personal approach is to say that we need every firm to be aware that managers have a responsibility to not only investors, but to the long-term health of the society and the planet, and most specifically, to the institutions for which capitalism relies. I don’t think we will address the problems we face unless and until we make sure that the institutions that balance the firms – government, labour, free media, independent press – can really hold firms to account. And just saying “be stakeholder-oriented” isn’t an answer unless you have the “what does that mean?” and “what measures?” and “who is enforcing it?”.
I believe in love, I believe in cooperation and being a part of something bigger than yourself and in real allegiance to the community.
Rebeccca Henderson, Author & Harvard Business School Professor
GQ: Then what about customer capitalism as the answer, as Steve Denning and Peter Drucker have argued?
RH: Again, firms really should care about their customers. But what do we mean by customer capitalism? Are we saying that investors have to get a lower return because they are doing everything they can to support customers? If customer capitalism is about the long-term prosperity of everyone, that isn’t customer capitalism, that’s just sensible and regular capitalism. But if you’re leaving money on the table, then who is investing in your firm? Or does customer capitalism mean that customers own the firm? Thats super exciting. But in either case, it must be clear who’s in charge for it to work.
GQ: As an economist, would you agree that most of human behaviour can be explained by the impulse to survive and basic self-interest?
RH: No I wouldn’t. I think humans are much more complicated than that. The pandemic is a major disaster, but one of its potential silver linings is that it made us very aware of how dependent we are on each other and how the “it’s about me” attitude is very destructive. There is a part of us focused on survival, for sure. But there’s also a strong part of us focused on our families, children and communities. I believe in love, I believe in cooperation and being a part of something bigger than yourself and in real allegiance to the community. In the long-run, the reason humans are complicated is because pure self-interest, people who think about nothing but themselves, we call them psychopaths. Humans don’t like psychopaths, it’s not a great long-term strategy. As a species, we’ve learned to have both sides of ourselves – parts of ourselves genuinely committed to our families and communities and also the parts of ourselves that are selfish. We need both because there is no such thing as a single individual standing on their own and surviving. Humans have to work with other people. As I said, the pandemic has really put into focus how interdependent we are.
GQ: Aren’t shareholders always going to want profits, rise in share price and market cap growth above all else? Can shareholders ever be incentivised to care about society and the planet?
RH: I think they can. That’s at the heart of my book in many ways. Businesses can have strong incentives to care about the health of the planet and the health of our society. That’s easy to see at a collective level. Suppose you owned everything, do you have an incentive to care about climate change? Absolutely – it’s going to create all kinds of economic problems and have an enormous risk to the stability of the financial system. You also have an incentive to care about society because your business is going to grow much faster in healthy societies where people have access to healthcare and education, where there is more talent, better trade and consumers to spend. We know that economic growth is faster and more sustainable in healthy societies.
There is also increasing evidence that investors don’t need to sacrifice returns. Research is clear that investors in firms that try to do the right thing and are committed to ESG metrics do not perform worse than conventional firms and can even perform better.
And if we think about how the world will change going forward, many of the biggest investment opportunities are going to be solving these problems. I don’t think it’s a coincidence that Tesla is one of the most valuable automotive companies and I don’t think it’s a coincidence that one of the most successful IPOs in the past 20 years was Beyond Meat. We have to move, sooner or later. Businesses, consumers and employees are going to insist we start treating our society and planet gently. Firms out there in front are going to make a lot of money, so there is a huge investment opportunity.
Lastly, many investors are so large that they can’t diversify away from the risk of climate change or that societies will falter. They are essentially holding the world as a portfolio. In my book, I talk about Japan’s pension fund, the largest pension fund in the world. Hiro Mizuno, who was the chief investment officer until recently, said the biggest threat to the long-term returns of his portfolio and pensioners’ is the risk of climate change. That’s an example of investors seeing that these risks are absolutely a risk to their returns.
We know that economic growth is faster and more sustainable in healthy societies.
Rebeccca Henderson, Author & Harvard Business School Professor
GQ: In your book, you speak about the intersection between inequality and climate change, in what ways are the two related?
RH: At the most basic level, climate change is going to hurt people at the bottom of the income distribution most aggressively and quickly. Right now, the burden of fossil fuels causes enormous health damage on top of climate change. Here in the U.S. and in many parts of the world, marginalised populations and communities of colour are exposed to the most damage because they are forced to live in high-pollution areas near these plants. So the fact that we are not responding to climate change is already imposing enormous harm amongst the poorest. As climate change hits, it’s going to hit marginal populations the hardest. Floods and droughts are becoming increasingly prevalent and it’s the people who can’t afford irrigation who are forced to migrate, it’s the people who cannot rebuild as the floods come who are going to be forced to move and live elsewhere. We see in the pandemic, that the odds of dying from coronavirus are dramatically higher if you’re poorer and communities of colour are disproportionately affected because their levels of welfare and income are so much lower. For me, inequality and climate are intimately linked and it’s about taking care of our society and the climate at the same time.
Also, just as we have a strong interest in preventing climate change, I believe that addressing inequality is in our interest. To the degree that people aren’t getting the education and healthcare they need, they are being systematically excluded from participation in the economic mainstream. We are losing people who can be fabulous entrepreneurs, employees or great consumers. Here in the U.S., within the next 20 years, half the talent pool is going to be people of colour. We need to make sure that all that potential has the supported needs to fully participate in the economy. One of the ways the economy can grow is bringing in marginalised populations into the economic mainstream.
GQ: You’ve been teaching at MIT then Harvard, and in total teaching MBAs for 33 years now. What are some of the changes you have seen with regards to what your students care about generally? Have your students’ attitudes changed over the past decade in what is sometimes called the rise of “consumerist” culture? Do you see more of them interested in responsible business?
RH: They are so much more interested in these issues than they used to be. When I first started teaching, I didn’t remember anyone talking about these issues. Fifteen years ago when I first started my course on sustainability, students would sign up but it wasn’t a mainstream issue. When I first started teaching Reimagining Capitalism there were only 28 students in the room. Now, we have over 300 and I’ve been asked to take these ideas into one of the required courses in the first-year on leadership and ethics. I’ve gone from being a radical to the point that many MBAs accuse me of being too incremental! It’s so different than it was 10 years or even 5 years ago. Just as we have a strong interest in preventing climate change, I believe that addressing inequality is in our interest.
Just as we have a strong interest in preventing climate change, I believe that addressing inequality is in our interest.
Rebeccca Henderson, Author & Harvard Business School Professor
GQ: You also have spoken about how the pandemic illustrates “how quickly we can change when we need to”. We see a lot of people talking about change, but then going back to the way things were before. Do you think most people and businesses will structurally change the way they think and behave due to this crisis?
RH: I’m sure businesses can, but will they? As you know, I was the Eastman Kodak Professor at MIT for a long time. I spent the early years of my career working with companies trying to change and I know how hard it is. So I don’t want to minimise the depth of the change we need, or how difficult that’s going to be on the individual level. One of the wonderful things about publishing this book is that I’ve gotten the chance to meet so many amazing people working to change the world and their firms. All of them say that it’s pretty hard. There are loads of reasons why corporations are hard to change. When you think about how many moving parts there are, you don’t want to mess with things too quickly. It’s like changing the engine mid-flight. But can it be done? Absolutely. Will firms do it? I am hopeful they might.
What the pandemic has done is alert us to the fact that things can go badly wrong. Before the pandemic, I would talk about how climate change can remake our society, and that inequality would lead to political breakdown. People have really changed the way they respond when I say these things now and there is a far greater sense of urgency. I also think the sense that our society isn’t working for people has become much stronger. People don’t believe capitalism works for them.
I found in my research that two things help firms change fundamentally. One is a real sense that the cost of not changing is too big to manage. It’s much easier to change the firm if you can see that otherwise, you’re going to fly into the ground. The pandemic has shown that we can change in a matter of weeks, not months. We’ve shown we’re much more responsive and flexible than we thought.
The other big thing to what really drives change is a shared sense of moral purpose. A sense that we must change and that it’s the right thing to do. Lots of research suggests that firms that have this have a much broader vision, they are more creative and more innovative than conventional firms. These are the firms that manage the large transitions – the moral purpose lets them deal with the uncertainty that comes with change. I think we can definitely change coming out of this. Is it guaranteed? Absolutely not. It’s important that all of us, as customers, as employees, as citizens, that we push for change. That we insist that firms have a sense of purpose and have a responsibility to the broader society and the world in which they’re embedded.
GQ: Could you share what worries you in the world? What’s the thing that keeps you up at night?
RH: I bet they’re the same things that keep you up! I’m afraid that we’re going to come out of the pandemic poorer than we were and when people feel stress, they fall back on familiar behaviour and won’t take the necessary risks to build a better world even though it’s clearly going to be better for the long-run. I’m afraid that we’ll see more authoritarianism emerge as people come disillusioned with democracy. I’m afraid that climate change will happen fast – everything the scientists are saying is it’s happening faster than expected. I wake up at 4 in the morning and go: it’s too late. But that’s my 4 in the morning thought. When I get up I think: it’s easy to despair but what good does that do? Nothing! So like many of us, I spend my time trying to make a difference because if we all do nothing, nothing will happen. If we all decide this is the change we want, it certainly will happen. We have the technology and the resources to build a just and sustainable world and a general sense of that must happen. We have a business case for it too. The costs of doing nothing are greater than the costs of changing. So I think we’re going to be okay.
22 July 2020 | In the latter part of 2016, Ethan Steinberg and two of his friends planned a driving tour across the U.S. to interview farmers. Their goal was to solve a riddle that had been bothering each of them for some time. Why was it, they wondered, that American agriculture basically ignored trees?
This was no esoteric inquiry. According to a growing body of scientific research, incorporating trees into farmland benefits everything from soil health to crop production to the climate. Steinberg and his friends, Jeremy Kaufman and Harrison Greene, also suspected it might yield something else: money.
“We had noticed there was a lot of discussion and movement of capital into holistic grazing, no till, cover cropping,” Steinberg recalls, referencing some of the land- and climate-friendly agricultural practices that have been garnering environmental and business attention recently. “We thought, what about trees? That’s when a lightbulb went off.”
The trio created Propagate Ventures, a company that now offers farmers software-based economic analysis, on-the-ground project management, and investor financing to help add trees and tree crops to agricultural models. One of Propagate’s key goals, Steinberg explained, was to get capital from interested investors to the farmers who need it — something he saw as a longtime barrier to this sort of tree-based agriculture.
Propagate quickly started attracting attention. Over the past two years, the group, based in New York and Colorado has expanded into eight states, primarily in the Northeast and Mid-Atlantic, and is now working with 20 different farms. Last month, it announced that it had received $1.5 million in seed funding from Boston-based Neglected Climate Opportunities, a wholly owned subsidiary of the Jeremy and Hannelore Grantham Environmental Trust.
“My hope is that they can help farmers diversify their production systems and sequester carbon,” says Eric Smith, investment officer for the trust. “In a perfect world, we’d have 10 to 20 percent of U.S. land production in agroforestry.”
For the past few years, private sector interest in “sustainable” and “climate-friendly” efforts has skyrocketed. Haim Israel, Bank of America’s head of thematic investment, suggested at the World Economic Forum earlier this year that the climate solutions market could double from $1 trillion today to $2 trillion by 2025. Flows to sustainable funds in the U.S. have been increasing dramatically, setting records even amid the COVID-19 pandemic, according to the financial services firm Morningstar.
And while agriculture investment is only a small subset of these numbers, there are signs that investments in “regenerative agriculture,” practices that improve rather degrade than the earth, are also increasing rapidly. In a 2019 report, the Croatan Institute, a research institute based in Durham, North Carolina, found some $47.5 billion worth of investment assets in the U.S. with regenerative agriculture criteria.
“The capital landscape in the U.S. and globally is really shifting,” says David LeZaks, senior fellow at the Croatan Institute. “People are beginning to ask more questions about how their money is working for them as it relates to financial returns, or how it might be working against them in the creation of extractive economies, climate change or labor issues.”
Agroforestry, the ancient practice of incorporating trees into farming, is just one subset of regenerative agriculture, which itself is a subset of the much larger “ESG,” or Environmental, Social and Governance, investment world. But according to Smith and Steinberg, along with a small but growing number of financiers, entrepreneurs and company executives, it is one particularly ripe for investment.
Although relatively rare in the U.S., agroforestry is a widespread agricultural practice across the globe. Project Drawdown, a climate change mitigation think tank that ranks climate solutions, estimates that some 650 million hectares (1.6 billion acres) of land are currently in agroforestry systems; other groups put the number even higher. And the estimates for returns on those systems are also significant, according to proponents.
Ernst Götsch, a leader in the regenerative agriculture world, estimates that agroforestry systems can create eight times more profit than conventional agriculture. Harry Assenmacher, founder of the German company Forest Finance, which connects investors to sustainable forestry and agroforestry projects, said in a 2019 interview that he expects between 4% and 7% return on investments at least; his company had already paid out $7.5 million in gains to investors, with more income expected to be generated later.
This has led to a wide variety of for-profit interest in agroforestry. There are small startups, such as Propagate, and small farmers, such as Martin Anderton and Jono Neiger, who raise chickens alongside new chestnut trees on a swath of land in western Massachusetts. In Mexico, Ronnie Cummins, co-founder and international director of the Organic Consumers Association, is courting investors for funds to support a new agave agroforestry project. Small coffee companies, such as Dean’s Beans, are using the farming method, as are larger farms, such as former U.S. vice president Al Gore’s Caney Fork Farms. Some of the largest chocolate companies in the world are investing in agroforestry.
“We are indeed seeing a growing interest from the private sector,” says Dietmar Stoian, lead scientist for value chains, private sector engagement and investments with the research group World Agroforestry, also known by the acronym ICRAF. “And for some of them, the idea of agroforestry is quite new.”
Part of this, he and others say, is growing awareness about agroforestry’s climate benefits.
Gains for the climate, too
According to Project Drawdown, agroforestry practices are some of the best natural methods to pull carbon out of the air. The group ranked silvopasture, a method that incorporates trees and livestock together, as the ninth most impactful climate change solution in the world, above rooftop solar power, electric vehicles and geothermal energy.
If farmers increased silvopasture acreage from approximately 550 million hectares today to about 770 million hectares by 2050 (1.36 billion acres to 1.9 billion acres), Drawdown estimated carbon dioxide emissions could be reduced over those 30 years by up to 42 gigatons — more than enough to offset all of the carbon dioxide emitted by humans globally in 2015, according to NOAA — and could return $206 billion to $273 billion on investment.
Part of the reason that agroforestry practices are so climate friendly (systems without livestock, i.e. ‘normal’ agroforestry like shade grown coffee, for example, are also estimated by Drawdown to return well on investment, while sequestering 4.45 tons of carbon per hectare per year) is because of what they replace.
Traditional livestock farming, for instance, is carbon intensive. Trees are cut down for pasture, fossil fuels are used as fertilizer for feed, and that feed is transported across borders, and sometimes the world, using even more fossil fuels.
Livestock raised in concentrated animal feeding operations (CAFOs), produce more methane than cows that graze on grass. A silvopasture system, on the other hand, involves planting trees in pastures — or at least not cutting them down. Farmers rotate livestock from place to place, allowing soil to hold onto more carbon.
There are similar benefits to other types of agroforestry practices. Forest farming, for instance, involves growing a variety of crops under a forest canopy — a process that can improve biodiversity and soil quality, and also support the root systems and carbon sequestration potential of farms.
A changing debate
Etelle Higonnet, senior campaign director at campaign group Mighty Earth, says a growing number of chocolate companies have expressed interest in incorporating agroforestry practices — a marked shift from when she first started advocating for that approach.
“When we first started talking to chocolate companies and traders about agroforestry, pretty much everybody thought I was a nutter,” she says. “But fast forward three years on and pretty much every major chocolate company and cocoa trader is developing an agroforestry plan.”
What that means on the ground, though, can vary widely, she says. Most of the time it is a company’s sustainability department that is pushing for agroforestry investment, not the C-suite. Some companies have committed to sourcing 100% of their cacao from agroforestry systems. Others are content with 5% of their cacao coming from farms that use agroforestry.
What a company considers “agroforestry” can also be squishy, she points out — a situation that makes her and other climate advocates worry about companies using the term to “greenwash,” or essentially pretend to be environmentally friendly without making substantive change.
“What is agroforestry?” says Simon Konig, executive director of Climate Focus North America. “There is no clear definition. There’s an academic, philosophical definition, but there’s not a practical definition, nothing that says, ‘it includes this many species.’ Basically, agroforestry is anything you want it to be, and anything you want to write on your brochure.”
He says he has seen cases in South America where people have worked to transform degraded cattle ranches into cocoa plantations. They have planted banana trees alongside cocoa, which needs shade when young. But when the cocoa is five years old and requires more sun, the farmers take out the bananas.
“They say, ‘it’s agroforestry,’” Konig says. “So there are misunderstandings — there are different objectives and standards.”
He has been working to produce a practical agroforestry guide for cocoa and chocolate companies. One of the guide’s main takeaways, he says, is that there is not a one-size-fits-all approach to agroforestry. It depends on climate, objectives, markets, and all sorts of other variables.
This is one of the reasons that agroforestry has been slow to gain investor attention, says LeZaks of the Croatan Institute.
“There really aren’t the technical resources — the infrastructure, the products — that work to support an agroforestry sector at the moment,” LeZaks says.
While agroforestry is seen as having significant potential for the carbon offset market, its variability makes it a more complicated agricultural investment. Another challenge to agroforestry investment is time.
Tree crops take years to produce nuts, berries or timber. This can be a barrier for farmers, who often do not have extra capital to tie up for years.
It can also turn off investors.
“People are bogged down by business as usual,” says Stoian from World Agroforestry. “They have to report to shareholders. Give regular reports. It’s almost contradictory to the long-term nature of agroforestry.”
This is where Steinberg and Propagate Ventures come in. The first part of the company’s work is to fully analyze a farmer’s operation, Steinberg says. It evaluates business goals, uses geographic information system (GIS) components to map out land, and determines the trees most appropriate for the particular agricultural system. With software analytics, Propagate predicts long-term cost-to-revenue and yields, key information for both farmers and possible private investors.
After the analysis phase, Propagate helps implement the agroforestry system. It also works to connect third-party investors with farmers, using a revenue-sharing model in which the investor takes a percentage of the profit from harvested tree crops and timber.
Additionally, Propagate works to arrange commercial contracts with buyers who are interested in adding agroforestry-sourced products to their supply chains.
“Here’s an opportunity to work with farmers to increase profitability by incorporating tree crops into their operations in a way that’s context specific,” Steinberg says. “And it also starts addressing the ecological challenge that we face in agriculture and beyond.”
15 July 2020 | The story of our warming planet can be told by degrees. The global thermostat has gone up 1 degree Celsius since the Industrial Revolution, and rivers of meltwater are now coursing off Greenland’s glaciers. Two degrees could mean crop failures and 500,000 deaths from malnutrition a year. Three degrees would be a hotter world than our species has ever experienced: The last time the temperatures rose that high was 2 million years before the evolution of homo sapiens.
Creep up another 2 degrees, and it could lead to the greatest mass extinction in earth’s history. To paraphrase Ron Burgundy, things escalate quickly.
If you are like most people, you have a sense that climate change is bad, but would be hard-pressed to explain the exact consequences of each additional degree of heat. A few degrees of warming doesn’t sound that bad, maybe no more dangerous than nudging up your thermostat. So at what point do sweaty summers and mild winters turn into extinction and the collapse of civilization?
A new book fills that knowledge gap: Our Final Warning: Six Degrees of Climate Emergency by Mark Lynas, an influential environmentalist in England. Lynas is known for his ability to spin stultifying scientific evidence into compelling prose and for conducting long-simmering public debates with other public intellectuals. Back in 2007, Lynas published another book, Six Degrees: Our Future on a Hotter Planet, but in the intervening years the climate changed so rapidly that he decided it needed not just an update, but a top-to-bottom rewrite.
As of 2015, a world warmed by 1 degree is reality, not a speculative future. Sea levels have climbed 6 centimeters, and evidence that fossil-fuel emissions are amplifying hurricanes has solidified. There’s so much new evidence that Lynas had to start over and write an entirely new book built on the same structure as the old one.
Lynas recently spoke with Grist about how much has changed in the last 15 years, how the COVID 19 pandemic resembles climate change, and how he manages to live happily while carrying the knowledge of looming doom.
Q.There was a similar magazine piece to your book that got a lot of attention in the States by David Wallace Wells, which came under criticism for conflating the worst-case scenarios with the likeliest future. How did you deal with the tension between telling a gripping story and being rigorous about facts?
a.The beauty of using 6 degrees of warming as a framing is you can have it both ways. It’s a grippingly terrifying story because you’ve got a strong narrative going from the relatively moderate 1-degree world up to the utterly terrifying 6-degree world, and you can read it almost like a novel as those worlds unfold. I’m not saying that we will ever see 6 degrees; that’s a product of decisions we have yet to make. I just think it’s useful to get outside these polarized debates about what the future will bring, because that’s not actually the question. The question is: What will happen if we do X? I don’t have to address the question of how likely it is, that’s a collective decision humanity will make over the next few decades.
Q. One of the scariest things you mention is the positive feedbacks, where, for instance, a world with 4 degrees of warming melts the Arctic permafrost, which could release enough methane to bump us up to 5 degrees.
a.Yeah, and that’s probably what David Wallace Wells would point to. Even if we are not going to quadruple our coal consumption, we still face the possibility of crossing these tipping points which make the global heating process unstoppable. Perhaps I’m more nuanced on that than I was in the first book: Some people thought that it was saying that if we crossed 2 degrees it would trigger a tipping point which would get you to 3, and then a tipping point which takes you to 4 like a line of dominoes. It’s not quite like that because we are not sure where the tipping points are, and because it takes time for them to play out. That Arctic permafrost is meters thick, it takes decades to melt, rot, and hit the atmosphere, and then decades more for that to turn into warming and then melt more permafrost.
On a lot of these tipping points, we are talking about centuries. For instance, I think we have already crossed the tipping point where the melting of Greenland has become irreversible, but it will still take centuries to unfold.
a.I’m a pretty strong climate hawk I would say. If we want to save even a semblance of the world’s coral reefs, we have to stay on a 1.5 degree pathway, even 2 degrees leads to the bleaching of something like 99 percent of coral reefs. The saddest things for me are the annihilation of our biological inheritance — rainforests, coral reefs, the Arctic. You can argue that humans can survive perfectly happily for the first couple of degrees. But for me, it’s nonetheless profoundly important, and something I’m quite happy to spend my entire life advocating on.
Q What about the scenarios that might not lead to the collapse of civilization but that would create mass suffering among people without access to air conditioning in, say, South Asia?
a.The date at which we make parts of the world uninhabitable because of extreme heat keeps coming forward. The first research on this put that date within a 5-degree scenario. It’s now between 3 and 4 degrees. We’ve already been close to conditions that make it lethal to stay outside in some parts of the Persian Gulf — just about touched it for a few hours. It wasn’t supposed to happen for another 2 or 3 degrees. That suggests it’s going to come more quickly. In terms of human consequences, the two issues that stand out are extreme heat and food production. I’m not confident that we can adapt the world’s breadbaskets to survive even 2 degrees warming.
Q. How does this grim knowledge make you feel day to day? Does it make you depressed, energized, or what?
a.I’ve been through all that stuff. I’ve had my periods of depression and profound sense of loss. To be honest, I’m so used to it, I don’t find it difficult to cope. I’m quite good at compartmentalizing. And these aren’t immediate things — it’s not the same as a war or pandemic, so you can actually forget about it for a bit.
Q. Do you see a parallel with the COVID pandemic?
a.The pandemic is like climate change on warp speed. The cause and effect are much more closely linked.
The lockdown is also a bit like the need to change our lifestyles to reduce carbon. So we stopped the flying, we change our diets, we make the sacrifices needed to bend the [carbon] curve. And then in the longer term, you’ve got the prospect of a vaccine. The climate parallel is technology substitution: You can replace dirty power with clean power, you can find ways to do zero-carbon travel. Those all take time, so in the short term, yes, we need to stop flying, but you can’t maintain lockdown forever, either for this virus, or for climate change.
Q. It sounds like you see both a need to live more simply, and embrace technology?
a.Well, the living simply thing isn’t going to work in the long run. The part of the world that is living simply, namely sub-Saharan Africa and other places way below the poverty line, don’t want to stay in that condition. It’s not a viable argument in a practical or even moral sense. Yes, it’s a lifestyle choice for certain people, but to pretend even for an instant that it’s a climate solution is insane.
Q. Wait, but you just mentioned flying less, don’t you think the richer world must make sacrifices?
a.I do, but only in the short term. Remember you can only sustain things by moral exhortation for a short period of time, and then people tire of it and move on. Like with the lockdowns, it’s a matter of months really. I think the same thing will apply to climate. Look, there are technologies available that would allow us to decarbonize and continue to grow prosperity, especially in the developing world.
Q. But in this book you are just laying out the consequences. You don’t propose solutions.
a.I just thought, fuck that, I wrote that book five years earlier, called Nuclear 2.0 It’s got a whole strategy mapped out for a transition to renewable energy and nuclear, etcetera, etcetera. Plus, I’d never be able to sell the book in Germany if I mentioned the “N” word. I would rather have a book that could be read by a wider group of people and allow them to then investigate solutions in whatever way they want.
This interview has been edited for length, accuracy, and clarity.
25 June 2020 | In the 1980s, a young chief of Brazil’s Kayapó people emerged from the Amazon forest to campaign on behalf of the Xingu River and its forests. His name was Paulinho Paiakan, and he not only saved the Xingu and its forests, but spent the rest of his life leading local, regional, and global efforts to protect other parts of the Amazon – the lungs of the planet – from loggers, miners, and others seeking to profit from its destruction. Paiakan’s life ended earlier this month, when he and several other Kayapó elders succumbed to COVID-19.
Deadly pathogens loom large in the recent history of all the people of the Amazon, who lived in splendid isolation until European invaders brought smallpox, measles, and influenza.
The invasions began 500 years ago, but are continuing today – with tragic consequences for indigenous people as well as the forests they protect and the global climate on which we all depend. The Paiter-Surui, for example, didn’t make First Contact with Brazilian authorities until 1969, and their population plunged from 5,000 to 290, while the forest they nurtured shrunk to a fraction of its previous size. Last year, the Intergovernmental Panel on Climate Change (IPCC) reported that roughly 23 percent of global human-caused greenhouse gas emissions come from the way we manage land, but that indigenous people around the world continue to manage land sustainably.
In April, the Kayapó ejected dozens of loggers from their territory – in part to save their forest, but also to protect themselves from COVID-19 – and ten years ago the Paiter-Surui tried to save their forest by launching the world’s first indigenous-led conservation project financed through the sale of carbon offsets. The groundbreaking project dramatically reduced deforestation within the territory for five years, but was suspended in 2018 after the discovery of large gold deposits in the territory sparked a surge in deforestation.
The pandemic is now hitting as new figures show deforestation surged 34 percent in President Jair Bolsonaro’s first year in office, accelerating a trend that began in 2016 following ten years during which Brazil was a deforestation success story.
It’s easy to attack Bolsonaro and his Alliance for Brazil for the acceleration of forest destruction, but neither he nor Donald Trump emerged from a vacuum. Both rode waves of resentment to power – resentment that flows in part from the fact that the world failed to adequately support the country’s efforts to save its forests after the country slashed deforestation a staggering 70 percent from 2005 through 2015 and reduced greenhouse gas emissions more than the entire European Union had in the same period.
COVID-19 is hitting indigenous territories harder than other parts of Brazil, according to the Federation of Indigenous Peoples of Brazil (Articulação dos Povos Indígenas do Brasil, “APIB”), which keeps a running total of known infections and deaths here, in part because of indifference and incompetence on the part of Brazilian authorities. On June 4, for example, the federal indigenous health service (SESAI) acknowledged that a COVID-19-positive doctor had visited several indigenous villages, an act that the attorney general’s office and APIB pin directly on shoddy reorganization of the service under Bolsonaro appointee Silvia Nobre.
Indigenous peoples are disproportionately vulnerable to COVID-19 and other communicable diseases, due to factors including often-poor access to health care resources, multigenerational living, and a lack of access to clean water and sanitation. Mortality rates for indigenous peoples in Brazil are double the national average. Access to healthcare is often poor to nonexistent: indigenous villages in the Amazon are on average 315 km away from an ICU bed in the Brazilian public health system.
The situation is even worse among uncontacted or newly-contacted people, according to the National Geographic’s Scott Wallace. He reports that the newly-contacted Kokama have lost 55 people to COVID-19 since early April, when a medical worker visited the village without following self-quarantine procedures that are routine for anyone visiting a remote village. Wallace also documents growing incursions by gold miners who practice an illegal form of alluvial mining (known as garimpo in Portuguese), which involves digging up massive amounts of soil, using mercury to draw out any gold, and then burning the residue. It’s the same practice that decimated the Paiter-Surui territory, and one that recent governments have turned a blind eye towards.
Forest Trends’ Response to the COVID-19 Indigenous Crisis
Ecosystem Marketplace publisher Forest Trends and our partners in Amazon countries are working with speed to direct relief to indigenous communities to immediately confront the impact of the pandemic, and to secure funds to scale these activities further.
The following activities are already under development by Forest Trends. We’re working to secure additional resources to scale these efforts and expand our reach.
We’re acquiring and safely distributing food, cleaning, and hygiene supplies, including coordinating the production and distribution of more than 30,000 masks.
We’re arranging for transportation of fuel and food supplies purchased by indigenous families (in partnership with government agencies), so that indigenous people do not have to travel to cities.
We’re disseminatinginformation, security protocols, educational campaigns, and opportunities to access emergency funds to all of our indigenous partner organizations. This includes a COVID-19 prevention information campaign. We’re also supporting a young indigenous leader in a series of videos interviewing elders and tribal leaders, which are being disseminated to indigenous communities as a short film and via WhatsApp.
We’re providing technical support for locally led projects responding to public tenders offering emergency funds, as well as crowdfunding campaigns. Projects are mainly focused on food security, communication, and obtaining working capital for indigenous enterprises including artisanal products and Brazil nut production.
We’re conducting a survey of food supply by indigenous organizations, establishment of partnerships with family farming organizations, and the creation of an operational distribution system with government agencies FUNAI and SESAI. We’re also partnering with communities on community-based food production systems, including traditional gardens and agroforestry systems.
Virtual communication based on internet connection is already a reality for indigenous peoples in the Amazon and is increasingly necessary and important in the context of the pandemic. We’re working to secure resources to support an indigenous-led communication network, identify connectivity gaps, install internet access points, and develop training and informational materials to improve health care at the village level.
Long Term Support
In the long term, there is a need for stronger surveillance and control. This means establishing and training a network of young indigenous monitors. Fences and gates must be installed at the entrance to indigenous lands, as well as checkpoints in strategic locations along roads and rivers. Surveillance expeditions, with the adoption of all security protocols, are also necessary in certain less populated regions of indigenous lands.
We envision a digital platform to engage communities, particularly young indigenous people, on territorial governance. This includes training materials on health care, economic resilience, food security, climate change adaptation, gender, intergenerational learning, and indigenous rights advocacy. A foundation of strong self-governance ensures strong indigenous institutions and territorial protection, including having the technological, financial, and technical resources to monitor indigenous lands against illegal incursions
17 June 2020 | After years of cutting down trees for firewood, thousands of residents living at the foot of Mulanje Mountain in Malawi are placing their hope in a mini-hydro system to power their district and save the vital forests in the region.
Biziweki Makupe, 34, is a smallholder tea farmer and shopkeeper from Nkuta, a village just at the bottom of Mulanje Mountain, in Southern Malawi. At his shop, he has always had trouble to market soft drinks: with no power he couldn’t keep them cold.
Recently, a new mini hydro-power plant is changing his business. But not only for him.
Mulanje is one of Southern Africa’s critical ecological hotspots. The large rocky mountain—whose highest peak towers at 3,000 metres— is commonly referred to as an ‘Island in the Sky’.
On foggy days, the mountain is enclosed in a smoke-like haze from which the top bursts, which has earned it its name.
As a tourist blogger vividly described, “to visualise the plateau below the peaks, consider simply a world of streams and forests and unique species where people, instead of sniffing the flowers, smell the unique and unmistakable smell of the trees.”
Despite being officially protected since 1927, severe deforestation and degradation is still taking place and has led to the sharp decline of species like the Mulanje Cedar tree and the Mulanje chameleon, species that cannot be found anywhere else in the world.
According to UNESCO, the Mulanje Cedar (Widdringtonia whyteii), Malawi’s national tree, is a key species found in the mountain high cloud forests and is listed as critically endangered on the IUCN Red List. Its timber is highly prized for a variety of specialist purposes; however, illegal unsustainable harvesting has led to diminishing forest cover.
Although large swathes of the forest reserve are now bare due to human activity, a local charity’s initiative is using a hydro-power initiative as one way empowering the community to desist from cutting down trees in the forest. So far, it is bearing fruits.
Cold drinks, clean shaves and growing trees
For Makupe and his neighbours, the newly gained access to electricity has meant a qualitative change. The mini hydro-electrical power plant installed at the base of the mountain by a local charity, Mulanje Mountain Conservation Trust (MMCT), is helping him to keep the drinks cold among other benefits.
“I am seeing more customers now after buying a refrigerator. Apart from closing later because of the extended lights, I also run a barbershop which has increased my revenue base. My life, and that of my family has improved,” he said.
The mini-grid infrastructure which generates about 220 Kilowatts was funded by international donor agencies. Revenue from electricity sales contributes to the cost of operation and maintenance. Customers are connected to the grid via pre-payment meters.
“We have power because of the mountain. Other villages in the district don’t have this opportunity,” said Makupe.
The $3-million project has also brought people like Makupe to understand the key role of the mountain, and interest to plant more trees has developed in the community.
Diness Sauka, 23, who dropped out of primary school, didn’t see the benefit of the mountain until recently. Although he has never hiked the massif, he recently got hired as a barber and he is now able to support his marriage from the wages.
“At first I used to travel a long distance to find jobs, but now I am employed right here in the village. My life has changed now,” he said, bubbling with a smile. While he used to be involved in logging for a livelihood, his wages are now enough to support him. He no longer sees a need to cut down trees.
Sauka makes around $30 dollars per month, which is enough to buy essential supplies for his family. His salary is roughly equivalent to that of some informal salespeople in larger townships.
“People were really excited because, at first, they would need to travel long distances, sometimes getting up as early as 2:00 am to access maize mills. Now, a mill nearby, the hospital and primary schools are being powered by the dam,” said Bertha Salima who heads the community committee managing the electricity.
Arnold Kadziponye, the project coordinator for the Mulanje Renewable Energy Agency (MUREA), which financed and supported the project, said that even students from the primary school are now performing better and the number of pupils has risen dramatically.
“Deforestation was very alarming because most people depended on firewood and producing charcoal from the trees in the mountain,” he said. Although the project started in 2008, the community only got connected in 2014.
Bring back the trees
But prosperity comes at a price. Kadziponye added that the population has grown in the country and the area. The energy demand has risen accordingly, and trees are being extensively cut down as a result.
“Most of the formerly forested area is now bare. Other people are coming up the mountain to cultivate and build gardens to sustain their livelihoods,” he added.
To tackle that challenge, and as part of the climate change mitigation efforts, the Mulanje Mountain Conservation Trust, a charity under which the energy agency operates is now engaged in afforestation activities to replace the depleted trees along with the community.
“We have youth clubs trusted with taking care of the mountain. Planting a tree is one thing, making it survive is another. As of last year, the survival rate was over 85 per cent. That is encouraging because previously it was 35 to 50 per cent,” Kadziponye said.
The increased survival rate can be attributed to the community understanding the importance of the forest with the coming of the mini-hydro electrical project. A visit to the area showed transmissions lines across the villages with a large number of houses connected to the electricity. Various small businesses which depend on electricity have also sprung up.
By using clean energy, says Kadziponye, the people now appreciate why it is important to conserve the forest as the electricity largely depends on the availability of water in the mountain. And the tree-covered mountain facilitates rainfall which also enables them to grow their crops, including tea. Locations close to Mulanje receive more rainfall, and more regularly, than other areas further from it.
As part of the initiative, the organization distributed 300,000 seedlings, which were planted up the mountain—the source of the river where water is tapped from—to ensure the water flow is conserved.
“Unless we have water, we cannot talk about electricity, and people have this message at the back of their minds. They have taken up the responsibility to make sure that there is water flowing in the river all year round. And chiefs around the area have teamed up to ensure the watershed is well protected. We are supporting them with tree seedlings,” he added.
Not everything was wine and roses, though. The charity faced challenges to convince the people of the need to embrace the tree planting project as part of the electricity project. At first, there was low turnout during the tree planting exercises. Being the first independent power producer in the country, there was skepticism about its effectiveness, as people are accustomed to the country’s main hydropower producer.
This mentality has shifted over the years, with a significant number (fourteen per cent) of those connected to the mini-grid using the power for cooking. It’s expected that the number will rise with more awareness and financial support through loans.
A long summer in Mulanje Mountain
The initiative, however, is far from being perfect. During the hot season experienced between October and April, when water levels are lower, the community has to ration the electricity. And while the organization would like to connect over 5,000 households, the current capacity is able to support half that population.
“Going forward we want to be self-sustainable because we were donor-dependent and we used most of the resources to create the mini-grids. At the moment we are looking for more funders to reach more customers and break even. There is greater demand for electricity and with resources available; we can reach out even to 10,000 customers.”, said Kadziponye.
The residents agree that the power needs to be increased and would like to see a cut in blackouts which sometimes take some hours. Edwin Mapira, 39, who owns one maize mill which is serving over 5 villages, said he would like to add more mills once the power generated in the area increases. Still, he’s proud of his region’s surge.
“This area used to be neglected because of its location, away from offices and roads, but we’ve witnessed a complete transformation as we’re now self-reliant with the coming of electricity. Other communities in this district envy us when they see how we are progressing,” he added.
9 June 2020 | At first glance, carbon markets seem like a perfect vehicle for helping restore the world’s soils. After all, human agriculture has extracted about 112 billion tons of life-giving carbon out of the world’s soils, and that translates into a staggering 425 billion tons of carbon dioxide in the air – or more than ten years’ worth of emissions.
In the first decade of this century, the Chicago Climate Exchange (CCX) pioneered the use of carbon offsets to promote “climate smart agriculture,” which includes no-till farming and the use of cover crops, among US farmers.
The program made ecological sense, but it failed to attract buyers – in part because climate-smart agriculture often pays for itself by improving yields and reducing the cost of inputs, although it’s not always clear from the start that it will work. Because the practice often paid for itself or cost very little to implement, it was difficult for farmers to demonstrate “financial additionality,” meaning they weren’t able to demonstrate that the carbon money made the emission reductions happen. Without additionality, they weren’t able to generate offsets that companies trusted enough to buy in order to reduce their own carbon footprints
It’s a quandary, because farmers who shift to climate-smart agriculture clearly benefit the rest of us, and the shifts do require risk and effort. We as a society should pay for those benefits, especially given the challenges that family farmers face today.
In the intervening decade, carbon markets have been used to help farmers implement climate-smart agricultural practices in countries like Kenya, where education and outreach were needed, but no one has found a way to make it work in the United States.
In the past year, companies like Nori and Indigo Ag are have picked up the thread by proposing the creation of offsets without financial additionality, while the American Forest Foundation is spearheading an effort to aggregate carbon impacts from small farms.
Now a bipartisan bill aims to ask the United States Department of Agriculture (USDA) to forge cooperation among these disparate efforts and create a nationally-recognized body of protocols that can be used to funnel carbon finance into sustainable agriculture, whether through offsets or through performance-based payments.
The Growing Climate Solutions Act is co-sponsored by Republican Senators Mike Braun of Indiana and Lindsey Graham of South Carolina, and Democratic Senators Sheldon Whitehouse of Rhode Island and Debbie Stabenow of Michigan.
The bill is technically an amendment of the Food Security Act of 1985, and it calls for the establishment of a Greenhouse Gas Technical Assistance Provider and Third-Party Verifier Certification Program that will certify market participants who have a proven expertise in both carbon finance and agriculture and provide a web portal for farmers to engage the markets.
5 June 2020 | With the 26th Conference of the Parties (COP26) to the United Nations Framework Convention on Climate Change (UNFCCC) pushed back a full year – to November, 2021 – the UNFCCC’s Climate Ambition Alliance has launched a global campaign called “Race to Zero” that encourages countries, companies, and other entities to deliver structured net-zero greenhouse-gas emission pledges by the time the talks begin.
Launched via global webinar today, the campaign aims to codify commitments made via the Climate Ambition Alliance (CAA), which launched ahead of last year’s COP25 in Madrid. The CAA currently includes 120 nations, 996 businesses, 458 cities, 24 regions, 505 universities and 36 investment groups that have committed to achieving zero net greenhouse gas emissions by 2050. Signatories are responsible for 23 percent of current greenhouse-gas emissions worldwide and 53 percent of global GDP, according to the Energy and Climate Intelligence Unit.
“Race to Zero” is intended to be an umbrella campaign for coordinating commitments made under existing initiatives (listed below) by providing comparability and establishing criteria for best practices.
What Are the Criteria?
The minimum criteria for establishing a recognized pledge were developed through dialogues coordinated by Oxford University and published here. Although pledges must include a clear net-zero target date no later than 2050, they must also begin immediately and include interim targets.
Much like the Paris Agreement itself, the criteria are designed to strengthen over time, but they begin at a level that reflects current best practices. They must, for example, cover all emissions, including measurable indirect emissions associated with the entity’s activities. For companies, this includes “Scope 3 emissions,” which are upstream and downstream emissions generated in a company’s value chain. For cities and regions, this includes all emissions within the territory.
What is the Role of Offsetting?
Offsets are emission-reductions generated outside a company’s own operations, and they are used in both compliance programs to meet mandated emission caps (“cap and trade”) and in voluntary programs to reduce a company’s overall impact (voluntary carbon markets).
Demand for voluntary carbon offsets hit a seven-year high in 2018 as companies moved to implement voluntary net-zero targets, according to Ecosystem Marketplace’s 2019 State of Voluntary Carbon Markets report. Volume for 2019 likely achieved a record high, and anecdotal evidence indicates that demand remains surprisingly resilient in the wake of the COVID-19 pandemic.
The criteria do not define a role for using carbon offsets in achieving net-zero targets, but instead acknowledge the global debate as it currently stands.
The Race to Zero criteria emphasize that if offsets are ultimately recognized, they must only be used to to neutralize residual emissions that can’t be eliminated internally – at least not immediately – and recognizes the current divide between organizations like the Environmental Defense Fund (EDF) and the World Business Council on Sustainable Development (WBCSD), which emphasize the use of high-quality offsets generated under recognized standards to accelerate overall reductions, and organizations like the Science-Based Targets initiative (SBTi), which has been reluctant to endorse offsetting to meet net-zero targets.
Oxford published a mapping of criteria designed to summarize the views of organizations that participated in dialogues held over the past two months, and the summary reveals positions common to anyone who has been following climate negotiations over the past decade.
“Several respondents suggest more specific conditions, arguing that, to the extent offsetting is incorporated, it should be reserved for hard-to-abate sectors (Carbon Trust), not exceed 10% of baseline emissions (Exponential Roadmap), or be focused on nature-based solutions within the same jurisdiction (Local Governments for Sustainability),” it says. “Furthermore, a number of responders made clear that they see a qualitative difference between avoided emissions and removals (University of New South Wales, the Union of Concerned Scientists, WBCSD) and suggested that targets should be divided to specify emissions reductions and removals separately (World Resources Institute, Carbone 4).”
Which Existing Networks are Included So Far?
The campaign includes the following existing networks:
27 May 2020 | Five months after floating the idea of a “European Green Deal” to achieve zero net greenhouse gas emissions by 2050, the European Commission has proposed funding that Green Deal in part through a €750 billion COVID-19 recovery instrument called “Next Generation EU,” which is embedded in a €1.85 trillion budget proposed today.
The bulk of the funding is earmarked towards a €560 billion “Recovery and Resilience Facility,” which will be equipped with a grant facility of up to €310 billion and will be able to make up to €250 billion available in loans. Support will be available to all Member States but concentrated on the most affected and where resilience needs are the greatest.
It’s not yet clear how much if the funding will go towards the European Green Deal, which is an ambitious plan that European Commission President Ursula von der Leyen first floated in December, 2019.
The proposal will go before the European Parliament in the summer.
1 June 2020 | If there was any doubt that we could meet the climate challenge without saving forests, the Intergovernmental Panel on Climate Change (IPCC) put that to rest in last year’s Special Report on Climate Change and Land (SRCCL). Fortunately, the Paris Climate Agreement contains provisions to promote policy approaches and positive incentives for activities under a mechanism known as REDD+ (or sometimes “REDD-plus”) according to UNFCCC, which stands for “reducing emissions from deforestation and forest degradation, plus the role of conservation, sustainable management of forests, and enhancement of forest carbon stocks.”
REDD+ makes it possible to support developing countries for their efforts to protect forests and to mitigation efforts – through fund-based payments, carbon market payments, or a combination of these. (For details, see our ongoing series “Shades of REDD+.”)
For these payments made, a series of thorny legal questions must first be answered. Who, for example, can claim credit for the carbon benefit delivered? Should an entitlement to payment depend on the so-called “ownership of emissions reduction (ER)”? And what are those ER rights and how can they be transferred?
For purposes of this discussion, forest carbon rights are defined by legislative and contractual arrangements to allow the recognition of separate benefits arising from the storage of carbon in the forests, or associated emission reductions and carbon removals. They can be linked to tenure ownership rights or some kind of control on the land and trees – or they can be considered as a separate interest on the land.
An emission reduction (ER) is a broad term for recognized reductions in greenhouse gas emissions (GHG). If the ER is certified and registered under a recognized carbon standard or under an MRV process agreed at multilateral or bilateral level, it can be traded or used either for countries’ NDC accounting or for offsetting purposes.
Depending on the national context, carbon rights and ER titles might be interchangeable, but this is not always the case.
All of these questions raise a number of legal issues, including how to define and allocate ER rights in order to transfer emissions reduction titles or receive payments linked to REDD+ programmes. If these legal issues aren’t addressed, then ownership can be unclear, and international donors are leery of financing programs or projects in areas where ownership is unclear and there is a risk of claims by third parties.
Here’s how five countries – Zambia, Mexico, Chile, Costa Rica, and Ivory Coast – are aiming to define carbon rights and to sell emission reductions or receive results-based payments in the context or supported by the UN-REDD Programme.
The UN’s Food and Agriculture Organization (FAO) is currently reviewing country experiences surrounding approaches to REDD+ and how private-sector projects can be nested in national efforts. In addition to forest monitoring and benefit sharing, the review also focuses on these legal issues.
The full FAO analysis on REDD+ nesting will become available during summer 2020 and the authors will be glad to hear from interested experts, receive their inputs through peer review and also make the FAO analysis available to them.
Carbon Rights and Benefit Sharing in Ivory Coast
In Ivory Coast, women and youths are included among those who participate in the country’s REDD+ benefit-sharing plan, which is currently under development. This inclusion is independent of whether they own land, although their participation in emission-reduction activities is evolving.
As the country is advancing in developing a benefit sharing plan to implement REDD+, it has become relevant to clarify who owns emission reductions and refine eligibility criteria and modalities of distribution for benefiting from REDD+ results-based payments. Vulnerable groups are also considered as beneficiaries, despite the fact that they are not always right holders, while the private sector is being actively consulted by the government in order to meet its concerns.
Devolvement and Transfers of Emission Reductions in Zambia
Ownership of carbon rights may be transferred to other actors if regulation is available. In Zambia, for example, all “forest produce” is owned by the government, which can devolve ownership to community forest management groups. These groups can transfer ERs to third parties and be compensated for their efforts in implementing REDD+. Third parties potentially include implementers of carbon projects who invested in REDD+ projects or donors paying for results-based payments.
Here, two pieces of legislation are important: the Forest Act of 2015 and the Community Forest Management Regulation of 2018.
The Forest Act of 2015 regulates national forests, local forests and community forests among others, providing some elements to determine who owns carbon. Under this act, the government owns all the trees in the country’s forests as well as all forest produce until they are transferred to others. “Carbon” is considered forest produce. The Act also describes community forest management groups that can own forest user rights, potentially including carbon, through community forestry agreements.
The Community Forest Management Regulation of 2018 explains that community forest management groups can transfer their rights and responsibilities, including carbon rights, to third parties. For doing this, community forestry management agreements are to be used that require approval by the Director of the Forestry Department.
Ownership in Carbon Stocks and Emission Reductions in Mexico
In Mexico a review of who owns emission reductions was undertaken in the context of the UN-REDD Programme. This review and severalother reviews helped to better understand the context, while proposing some legal options.
According to the REDD+ National Strategy (ENAREDD+ 2017-2030), which was developed under the umbrella of the National Forestry Commission of Mexico (CONAFOR, or Comisión Nacional Forestal), ownership of emission reductions needs to be neatly distinguished from ownership in carbon stocks. Forest owners own carbon stocks and they can trade it in the context of the voluntary markets or regulated schemes. In particular, Mexico has recently launched a 3-year pilot phase of its ETS which is expected to recognize the use of forest offsets to support participants to achieve their emission reduction targets.
The situation differs with regards to avoided emissions from deforestation which is considered illegal in Mexico. Since counterfactual measurement of avoided deforestation could not be tied to a specific plot of land, rights could not be awarded to specific landholders, whether they are smallholders, communities or ejidos (a Mexican system of communal land tenure). Rather, CONAFOR, which is in charge to implement REDD+ policies and measures at country level, is proposed to administer emission reduction titles in the context of REDD+ results-based payments received for implementing ENAREDD+.
In parallel, CONAFOR has also dedicated much effort to defining arrangements for sharing the benefits from results-based payments and/or selling emission. reductions. A benefit-sharing distribution plan, still under development, establishes criteria to reward those who contribute to reducing emissions, including people with and without tenure rights.
Chile: Avoiding potential claims by third parties
Problems can arise when projects are generating ERs at the same time governments are trying to access results-based finance from international based-programs to avoid double payments before getting paid for mitigation results, forest country governments are required to subtract credits sold by projects from their estimated jurisdictional performance. In some cases, once a government subtracts project credits, there is nothing left for the government to claim—reducing the “incentive” for government action.
In Chile’s approach, emission reductions are the result of a set of policies and incentives that aim to stop the activities of degradation and deforestation. As national assets, according to the Constitution, they belong to the Nation. In the context of Chile’s proposal to the GCF they will be administered by the National Forestry Commission (CONAF).
Ownership of the emissions reductions paid for by the GCF will not be transferred to the GCF but remains with the country. Payments are recorded in the UNFCCC web portal and corresponding emission reductions could be listed in a national registry or on the UNFCCC web platform. The emission reductions will no longer be eligible for sales or compensation, but countries can use the emission reductions towards achievement of the climate action plans (NDCs, for “Nationally-Determined Contributions”) created under the Paris Climate Agreement.
Transferring ER titles in Costa Rica
In Costa Rica, emissions reductions from avoided deforestation and regeneration of degraded forests are realized by forest owners, whether natural or legal persons.
The National Forest Financing Fund (FONAFIFO) is authorized by Forest Law 7575 (articles 46 and 47), as well as its Regulation, Executive Decrees 25721-MINAE and 40464-MINAE to enter into agreements for the sale and purchase of ERs generated by forests through the ER Program. FONAFIFO can sell ERs provided it holds a contract that allows it to claim the emission reduction title from the primary owner, public or private.
Conclusion: more clarity is needed
In conclusion, more clarity is needed on who has the rights to transfer ER titles and/or claim for payments related to certified emission reductions and how to transact them. Transparency and equity should guide the distribution of REDD+ benefits among the actors who contributed in generating REDD+ results-based payments. The above explains that greater clarity is a precondition for countries accessing REDD+ results-based payments. Moreover, a stable enabling environment will afford appropriate forms of legal protection to contracting parties and thus stimulate private-sector investments in REDD+, while protecting vulnerable groups.
The FAO’s REDD+ legal team is supporting some REDD+ countries in clarifying legal matters to implement REDD+ result-based actions; some of which are mentioned in this blog. We expect that countries will make more progress in this topic in the years to come.
27 May 2020 | Guatemalans who defend forests have often risked their lives to do so, and they were also among the first in the world to engage in civil society-led projects to reduce emissions from deforestation. As early movers, they pioneered governance and benefit-sharing models that are currently being used by many projects around the world. Now, the country is taking new steps to “nest” those early stand-alone projects in a national REDD+ strategy.
The Guatecarbon Project, for example, was established in 2007 and builds on cooperation between the National Parks Authority (CONAP) and the Forest Communities of Petén. It covers over 721,000 hectares and relies on government-designated community forest concessions. The project is designed to protect the Mayan Biosphere Reserve and support local communities.
Livestock and Agriculture: Main Drivers of Deforestation
Guatemala’s forests form part of the Mesoamerican biodiversity corridor, the strip of land that links South America with North America and contains between seven and ten percent of the world’s known species. Back in the 1950’s, these forests covered more than 60 percent of the country, but large areas of this biodiversity hotspot have been lost.
Major rural transformation has driven forest clearance for crop production, cattle ranching and urban area expansion. Unequitable land distribution and a poor land tenure regime have contributed to deforestation. Today, the forest covers only 33.5 percent of the country. While deforestation has slowed in the past few decades, it still ranges between 30,000 to 40,000 hectares a year. Livestock production has accounted for 73 percent of the deforestation since 2006, whereas agricultural production (staple crops, oil palm, rubber, sugar cane and coffee) has accounted for 21 percent.
Lately, Guatemala has seen increasing deforestation in the Laguna del Tigre, the country’s largest national park, which has lost 30 percent of its forest cover since 2001. The clearing of forest for cattle ranching has been facilitated by weak governance, poor budgets and scarce enforcement of protected areas. Furthermore, drug trafficking exacerbates deforestation in the protected areas in the north of the country, by capitalizing on cattle operations to gain access to territory, launder money and smuggle drugs.
The National REDD+ Strategy
Despite these challenges, Guatemala has set for itself the ambitious goal of stabilizing its forest cover at the 2019 level, and REDD+ is key to achieving this. The government started preparing its national REDD+ strategy in 2012 and last year finalized and submitted its Emission Reduction-Program (ER-Program) to the World Bank’s Forest Carbon Partnership Facility (FCPF)’s Carbon Fund. In addition, the Government of Guatemala has leveraged a total of USD24 million through the World Bank’s Forest Investment Program, to support the upscaling and improvement of forest incentives programs in 47 prioritized municipalities.
Current efforts build on earlier policies geared towards protecting the country’s precious ecosystems. The Government created the Protected Areas System in 1989, and in 1997 it pioneered payments for ecosystem services (PES) in its Forest Incentives Program (Programa de Incentivos Forestales, “PINFOR”, which later became “Probosque”). In 2010, it launched the incentives program for small forest owners and agroforesters (PINPEP).
These PES programs create incentives for land owners and managers -with or without formal title- to restore, protect and sustainably manage forests. Guatemala also adopted a forward-looking Framework Law on Climate Change, which provides grounds for the implementation of a REDD+ national program and authorizes REDD+ projects.
Guatemala’s REDD+ strategy aims at improving institutions and enforcement and creating incentives for sustainable livestock production and agricultural supply chains. Turning the strategy into action will require a reform of forest policies, as well as the strengthening of institutions and governance. The national REDD+ strategy – operationalized in the ER-Program – builds on existing incentive programs, PINPEP and Probosque. It also relies on the cooperation with existing civil society efforts, and integrates the Guatecarbon and Lacandón projects and, upon VCS registration, the Reddes Locales para el Desarollo project into the program.
Public-private Collaboration in REDD+ Projects
Guatemala’s REDD+ projects are located in regions of the country with low levels of governance. These projects have been developed and implemented with the support of communities and smallholders, and they have managed to measurably (and visibly) reduce deforestation in their project areas.
Most of the existing REDD+ projects rely on close cooperation with national authorities, and some, such as the Guatecarbon project, are designed as part of a public-private partnership on the basis of community concessions. Others, such as the Reddes Locales para el Desarollo project, are developed in close cooperation with national entities and municipalities.
The Guatecarbon and Lancandón projects have been registered with the VCS since 2012, and the Lacandón and Costa de la Conservación projects have benefited from private investment and carbon credit sales.
Aligning Projects with the FCPF Emission Reduction-Program
Integrating forest carbon projects into Guatemala’s national REDD+ strategy makes “nesting” an essential task. For Guatemala, nesting implies harmonizing carbon accounting and measurement across projects and with the national greenhouse gas monitoring system. Most immediately, the country is working to align project baselines (i.e. assumed “business as usual” emission levels used to estimate emission reductions) with the baseline, or reference level, that has been developed for the ER-Program proposed to the FCPF Carbon Fund.
The project baselines were originally established using methodologies that approved for VCS projects. However, these are not completely compatible with the methodological framework of the FCPF Carbon Fund. Their integration into the ER-P reference level results in a substantial cut in projected emission reductions for the projects. This means that the integration of projects into the ER-Program poses technical and political challenges to both the project owners as well as the government.
However, over the last weeks, there has been progress in determining how projects and the government’s ER-Program can be implemented and generate emission reductions simultaneously. The Government of Guatemala has led numerous rounds of consultations with representatives of the REDD+ projects and other stakeholders. This process – which benefited from a cooperative spirit and good will from all sides – resulted in the adoption of a National Nesting Strategy. The principles of that strategy have been reflected in the Benefit-Sharing Plan for the ER-Program and will also be included in a national regulation that guides the implementation of the national REDD+ strategy. This Benefit-Sharing Plan regulation will formulate the rules and procedures for REDD+ projects to participate in the proceeds of carbon sales to the FCPF Carbon Fund, but also allows projects to market a portion of their carbon credits independently.
Nesting Projects in the National Reference Level
As elaborated in an earlier blog in this series, efforts to account for emission reductions from stand-alone projects and broader jurisdictional efforts often lead to confusion. Nesting provides a solution to organize—as well as incentivize—efforts at different scales.
In Guatemala, the methodological approach for nesting of project baselines in the national reference level is based on a set of principles discussed and agreed upon by the stakeholders. It is designed to integrate and reflect the conservation successes of early REDD+ projects, but also consider variables related to deforestation and degradation risk.
Specifically, the government-approved reference level for the ER-Program is divided into portions or ‘quotas’. In assigning the quotas, two set of criteria will be used: a primary set of criteria, which is based on the current forest cover and the deforestation/degradation rate in a recent period; and a secondary set of criteria, which depend on whether the covered forest belongs to a protected area, water recharge areas, or a potential restoration area. The primary criteria have a higher weight than the secondary criteria because they help identify and reward the greater effort needed to implement actions in areas where the risk of deforestation is highest. The secondary criteria allow to prioritize areas where government is implementing natural resources management and conservation actions.
Actual emission reductions will be measured using the national monitoring system, which is capable of estimating emissions and removals during the reporting period in the various areas of interest. New projects may be developed that do not overlap with existing projects; quotas will be estimated for such projects.
Cooperation is of the Essence
Guatemalan governmental institutions and national stakeholders have faced considerable difficulties in designing a national nesting approach to reconcile the different positions and sometimes conflicting interests among projects and the ER-Program. Yet transparency and close cooperation and intensive discussions among all national actors, and ensuring proper inclusion of REDD+ projects’ interests, has proven to be the right approach for Guatemala.
A united front to defend the common position developed by public and private actors is now needed as Guatemala enters the final phase of negotiating the sale of emission reductions with the FCPF Carbon Fund. Moreover, strong local and national agreement on the implementation of REDD+ is essential to ensure the outcome of this negotiation process is considered legitimate, particularly by actors who risk their lives protecting forests in remote areas of the country.
21 May 2020 | America’s largest bank is shunning calls from shareholders to disclose its full emissions, despite warnings from its own economists that “catastrophic” climate change could end up threatening human life “as we know it.”
JPMorgan Chase, which a coalition of U.S. environmental groups recently claimed is the world’s largest financer of fossil fuels, has instructed its shareholders to vote down a proposal for the bank to report the emissions of its lending activities at its upcoming annual general meeting (AGM) on May 19.
Now treasurers from eight U.S. states are joining a call for JPMorgan to elect an independent board chair who will guide the company’s financing to align with the Paris Agreement.
The bank has also faced pressure from shareholders this year for encouraging Lee Raymond, former CEO of ExxonMobil, to stay on as a member of JPMorgan’s board. Exxon has donated tens of millions of dollars to organizations casting doubt on anthropogenic climate change, including under Raymond, who later this year will step down from leading JPMorgan’s board but remain a director. The group of state treasurers also oppose Raymond staying on the board.
We must address the financial and climate risks to @jpmorgan associated with fossil fuels.
That’s why we’re voting ‘no’ on Lee Raymond—his excessive tenure, climate change denial and fossil fuel connections prove he can’t be an independent director.https://t.co/g7e4Xzdr9i
“As part of a broader plan for the bank to seriously grapple with the risks climate change poses to investors, Raymond should plan to retire from the board entirely,” said Maryland State Treasurer Nancy Kopp in a statement. Kopp and state treasurers of Connecticut, Maine, Massachusetts, Oregon, Rhode Island, Vermont, and Wisconsin united with efforts of the Pennsylvania treasurer, comptrollers of New York City and New York State, and the California public employee retirement program in pressuring JPMorgan on its climate governance.
Shareholders Pushing JPMorgan on Climate
While JPMorgan touts the “leadership role” it says it has taken to address the “challenges and opportunities of a carbon-constrained environment,” climate activist shareholders are calling for it to publish “if and how” it plans to put its investments in line with the goals of the Paris Agreement and whether it is considering setting emissions reduction targets for its lending. Activist shareholders increasingly have been using the AGMs of fossil fuel companies and their funders to push for climate action from the inside.
JPMorgan currently only publishes the emissions produced by the bank’s own operations, with its first “climate change report” released last year stating that it was “focused on defining and obtaining the right data” on its clients’ “climate-related risk” but that it was at the “early stages of this journey.”
Another proposal to be considered at the AGM next week, put forward by Trillium Asset Management, a Boston-based company focused on socially responsible investing, urges the bank to outline how it plans to respond to “rising reputational risks” relating to its investments in the controversial Canadian tar sands and oil and gas companies operating in the Arctic.
JPMorgan announced in February that it would stop financing companies involved in thermal coal and new Arctic oil and gas development, while increasing its financing of renewables.
Over the past 3 years @Chase has lent $196 billion to the fossil fuel industry; if you look at the worst projects, they’ve lent 63% more than anyone else. They are the Doomsday Bankhttps://t.co/bYwZQdYiSA
But Trillium’s proposal argues that the bank is the “largest global lender and underwriter” to the top 30 companies already operating in the Arctic, as well as the top 34 companies involved in the Canadian tar sands.
The bank’s Board of Directors are advising shareholders to vote against both motions, in a move that activists argue puts them at odds with their American peers.
A recent report by the Rainforest Action Network (RAN) said JPMorgan had become “the first bank to blow past the quarter-trillion dollar mark in post-Paris fossil financing, with $269 billion in 2016-2019.”
RAN’s findings have galvanized shareholder calls for banks to phase out fossil fuels, with activists pointing to RAN’s research to push for change at JPMorgan’s AGM.
Bank Resists ‘Moderate’ Carbon Footprint Proposal
Danielle Fugere, President of shareholder advocacy group As You Sow, which filed the proposal on carbon emissions disclosure, told DeSmog: “What we are asking them to do is measure, disclose, and set a target to become Paris aligned.”
“We are asking this not only because climate change poses risk to the bank, but because it poses systemic risk to shareholders.”
“Many U.S. banks are waiting for a perfect system to emerge for them to begin measuring climate risk — if they wait for that, it’ll be too late — we are really trying to press them to move faster than they may think they need to,” she added.
Yet, in a position that Fugere feels is out of step even with its fellow American investment banks, JP Morgan has resisted what she calls a “moderate” proposal to commit to and report on a plan to reduce so-called “financed emissions” produced by the companies to which it lends.
Defending its current approach on climate change in response to the proposal, JPMorgan argues it provides “transparent disclosure of our approach to and performance on environmental, social, and governance (ESG) topics through multiple channels” and “supports public sector leadership to drive carbon emissions reductions on a global scale.”
In response to the proposal on oil and gas developments in the Arctic and Canadian tar sands, JPMorgan pointed to its recent commitment to end project financing for new Arctic developments and said both Arctic and tar sands developments were “sensitive sectors” and therefore subject to “enhanced review” by its Global Environmental and Social Risk Management team.
Kirsch called JPMorgan’s Arctic announcement “small potatoes in light of what it needs to do to stop being a climate villain.”
As You Sow’s Fugere argues the bank’s gradual shift on fossil fuel financing is leaving it behind the curve. Over the last year As You Sow has researched the investments of five leading U.S. financiers and filed similar shareholder proposals with Goldman Sachs, Wells Fargo, Morgan Stanley, and Bank of America.
Those banks have appeared to shift to accommodate shareholders’ requests, Fugere says, leading the group to withdraw their motions, “because those banks agreed to begin the process of finding an appropriate method for measuring their carbon footprints.”
JPMorgan Chase is, by contrast, resisting such pressure ahead of its AGM and instead directing its shareholders to vote against the proposal.
Eli Kasargod-Staub, cofounder of shareholder activist nonprofit Majority Action, says JPMorgan’s next shareholder meeting will be a “litmus test” for big asset managers such as Vanguard and BlackRock, which together hold nearly 15 percent of shares, to see if they are really committed to their pledges on climate change.
JPMorgan declined to provide comment for this article when approached by DeSmog.
19 May 2020 | “I am receiving more reports every day from all corners of the globe about how indigenous communities are affected by the COVID-19 pandemic and it deeply worries me to see it is not always about health issues”, said José Francisco Cali Tzay.
In a statement Monday, the Special Rapporteur – a Maya Kaqchikel from Guatemala who took up his post on 1 May – urged Governments worldwide to ensure that indigenous peoples have access to information about COVID-19 in their languages.
Urgent special measures must also be put in place to ensure availability and access to culturally appropriate medical services, he added, emphasizing that public health facilities are often too scarce in indigenous communities.
The rights to development, self-determination and lands, territories and resources must also be guaranteed, in order for indigenous peoples to manage the crisis and advance sustained development and environmental protection.
Mr. Cali Tzay said that in many countries, states of emergency are exacerbating the marginalisation of indigenous communities – and in the most extreme situations, militarisation of their territories is taking place.
“Indigenous peoples are being denied their freedom of expression and association, while business interests are invading and destroying their lands, territories and resources”, he said.
In some countries, he stated, consultations with indigenous peoples – as well as environmental impact assessments – are being abruptly suspended in order to force through megaprojects relating to agribusiness, mining, dams and infrastructure.
“Indigenous peoples who lose their lands and livelihoods are pushed further into poverty, higher rates of malnutrition, lack of access to clean water and sanitation, as well as exclusion from medical services, which in turn renders them particularly vulnerable to the disease”, he said.
Indigenous communities that have managed to best resist the COVID-19 pandemic are those that have achieved autonomy and self-government, which allows them to manage their lands, territories and resources, and ensure food security through their traditional crops and traditional medicine, he noted.
“Now, more than ever, Governments worldwide should support indigenous peoples to implement their own plans to protect their communities and participate in the elaboration of nationwide initiatives to ensure these do not discriminate against them”, he said.
The collective good
He added: “The pandemic is teaching us that we need to change. We need to value the collective over the individual and build inclusive societies that respect and protect everyone. It is not only about protecting our health.”
Special Rapporteurs, appointed by the Geneva-based Human Rights Council, are independent experts within the United Nations human rights system who address either country-specific situations or thematic issues in all parts of the world. Serving on a voluntary basis, they are not UN staff members nor do they receive a salary for their work.
Mr. Cali Tzay was previously the four-term President of the Committee for the Elimination of all forms of Racial Discrimination, which oversees the implementation of the International Convention on the Elimination of All Forms of Racial Discrimination. The founder of several indigenous organizations in Guatemala, he also once served as his country’s ambassador to Germany.
19 May 2020 | Year-end climate talks have been postponed due to the COVID-19 pandemic, but some technical meetings are scheduled to take place online in October, and the United Nations Framework Convention on Climate Change (UNFCCC) yesterday announced that a series of scaled-down meetings will take place online from June 1 through 10.
Dubbed “June Momentum for Climate Change,” the series of online events will be overseen by the chairs of the two key subsidiary bodies – namely, the Subsidiary Body for Scientific and Technological Advice (SBSTA) and the Subsidiary Body for Implementation (SBI).
A preliminary schedule posted here shows a series of mostly technical meetings, as well as the launch of the “Race to Zero” campaign which is designed to engage cities, regions, businesses and investors in the goal of achieving net zero emissions by 2050 at the very latest.
13 May, 2020 | Last month, health care experts from across the United States gathered to address hundreds of journalists and policymakers by webinar. But their focus was not testing, nor vaccines, nor “herd immunity.” It was not even COVID-19, really. Instead, their focus was climate change.
“While many see issues like climate change and biodiversity loss as far from what’s going on right now … I see this as the time to talk about it,” said Aaron Bernstein, a pediatrician at Boston Children’s Hospital and a professor at Harvard Medical School. “Climate solutions are, in fact, pandemic solutions.”
A few days later, economists and policy experts with the World Resources Institute held their own panel discussion. The message was similar, and the audience one of the largest in the organization’s history. The experience of and response to COVID-19, proclaimed expert after expert, was intricately tied to climate.
Indeed, increasing numbers of researchers and policymakers, scientists and health care practitioners, are looking at the coronavirus through an ecological lens. Whether they are focused on consumer behavioral shifts, changes in emission outputs, or policy decisions that might help or hurt long-term goals for green infrastructure, they are seeing in this moment a pivotal chance to address climate change.
“As we respond to the very imminent economic and health crisis, can we also tackle the climate and sustainability crisis?” asked Manish Bapna, WRI’s managing director and executive vice president.
There have been a number of short-term environmental shifts connected with how the world is coping with the pandemic. China’s carbon emissions dropped 18% between the beginning of February and mid-March, according to data compiled by the website CarbonBrief. Pollution over India has decreased dramatically, according to satellite images from NASA’s Earth Observatory. And in the U.S., a dramatic decrease in air travel, as well as a drop in vehicular travel, has also lowered emissions.
But many of these changes are temporary, researchers say, and may barely register on any long-term analysis of global carbon emissions. The drop in China’s carbon output, for instance, came alongside a lockdown over much of the country and a related plunge in factory operations. As the country reopens, says Fang Li, chief representative of the World Resources Institute in Beijing, emissions are expected to rebound along with the economy. After the global financial crisis of 2008 and 2009, Dr. Fang and others point out, global emissions grew rapidly.
Renewing a focus
For many climate advocates, this is a reason to push green initiatives now. Environmentalists worry that unless policymakers focus on climate as part of their economic packages, the pandemic could lead to policy shifts that would undermine years of hard-won climate victories. Indeed, the Trump administration in late March announced that it would weaken Obama-era fuel standards that mandate increased fuel efficiencies for automobiles. It also announced last month that the Environmental Protection Agency will not enforce environmental regulations during the pandemic.
“What we have to worry about is whether … policy changes are going to be long term or short term,” says Christopher Jones, director of the CoolClimate Network at the University of California, Berkeley. “If we roll back standards and they remain in place when the economy comes back, we are going to have a real problem.”
Researchers say that a green economic stimulus package could both help the U.S. ensure long-term sustainability and rebound from the crushing economic impact of the pandemic. (More than 26 million Americans have filed for unemployment benefits since March 15, according to the U.S. Labor Department.) Many environmentalists look at the American Recovery and Reinvestment Act, the stimulus package signed by President Barack Obama in 2009, as an example of how government initiatives can spur climate-friendly industry. That bill, which earmarked some $90 billion to promote green energy, is widely credited with launching the widespread renewable energy sector in the U.S.
“Economic measures should focus on climate as well as jobs and livelihood,” Mr. Bapna said during the WRI panel.
But as Kenneth Gillingham, a professor at Yale University and a research fellow at the National Bureau of Economics Research, points out, the pandemic itself has slowed renewable energy efforts.
“There’s a slowing down of building new solar farms, of new wind facilities,” he says. “Some projects are hitting the pause button. Other projects may not happen for a long time.”
And while there is hope for a green renewal, he suspects the future will be a good deal more nuanced.
“Entirely rebuilding our economy as a green economy? It’s a wonderful vision, but I don’t believe that’s what we’ll likely see,” he says.
But a move toward environmental sustainability, says Dr. Bernstein, is going to be crucial not only for combating a climate crisis, but for helping some of the people most impacted by the coronavirus. As he points out, both the pandemic and the impacts from climate change disproportionately affect people of color and other marginalized groups.
There is, he and others say, a hopeful lesson to be taken from the massive lifestyle and economic shifts seen across the globe in response to COVID-19. For years, popular wisdom has said that people simply would not engage in the sort of behavior changes necessary to fight climate change; that they wouldn’t stop traveling, wouldn’t stop consuming, wouldn’t sacrifice material comforts and help save others who are most immediately at risk from climate change. Now, the response to the pandemic suggests otherwise.
“We are able to mobilize the entire global economy and population for an imminent threat,” says Dr. Jones. “Both climate change and this pandemic both affect the most vulnerable. But everybody is willing to make personal sacrifices to protect the most vulnerable. I think that’s quite new.”
The question, he and others say, is whether people will be able to see climate change as a similarly “imminent threat,” deserving of action. While climate researchers look at the world’s increasingly frequent and severe natural disasters and see a direct connection to human behavior, research shows that most everyday people still feel disconnected from both the impacts and causes of climate change.
“We don’t experience risk properly,” says Katharine Hayhoe, professor and director of the Texas Tech University Climate Science Center.
But with the coronavirus, researchers say, there is a chance to shift.
“It can make people feel that what was previously unthinkable is plausible,” Dr. Jones says. “They know what the experience feels like.”
6 May 2020 | The Amazon rainforest has been shaped for millennia by human occupation, but of a kind that is very different from the logging, razing for cattle ranches, and plowing for soy that we see today.
Traditional Amazon systems have been based on diversity, not monoculture, taking advantage of a multitude of different crops and wild-harvested foods, drawing carefully on different forest types and cultivated areas, and keeping the overall landscape intact. You may be surprised to learn that the Amazon in many ways is much closer to a carefully tended garden than a wilderness.
The COVID-19 pandemic has highlighted the fragility of global food supply chains.Unfortunately, the pandemic has also provided cover for a spike in deforestation in many places, undermining an important source of food security for many rural and indigenous communities. Indigenous communities, already buffeted by economic pressures, invasions of their territories, and violence against their leadership, are feeling the brunt of the pandemic.
Recovery planning should mimic the original Amazon strategy: instead of relying on single-product economies based on beef, soy, or palm oil, we can create a diversity of supply chains based on the incredible natural wealth of the region. We can focus on products that sustain the forest and the communities living there, instead of products that drive forest loss.
Our Amazon strategy is threefold:
First, partner with indigenous communities to incubate new value chains for products that can be grown and harvested without cutting down forests.
Next, create market demand and viable supply chains for these products by working with a broad network of buyers, restaurants, food writers and culinary influencers, entrepreneurs, and conservation groups in South America and around the world.
Finally, it’s necessary to take on the other side of the equation – engage companies and governments in the battle to reduce global demand for illegal and unsustainable beef, soy, and timber, and enforce existing laws to protect forests and the rights of indigenous peoples.
These efforts mutually support each other and deliver more resilient livelihoods and food security for communities. They also create an economic engine to keep the Amazon forest intact – something that is non-negotiable if we’re to meet climate and biodiversity targets.
A portfolio of forest-friendly products
Investments in agroforestry projects in indigenous communities, like Forest Trends’ new partnership with the Arbor Day Foundation, are a triple win. They improve food security, while also increasing carbon storage and supporting biodiversity. Agroforestry projects also focus on marketable crops like açai, Brazil nut, cocoa, and babassu that bring in additional income.
Another initiative, backed by the Ikea Foundation, focuses on bringing back traditional knowledge of medicinal plants from the brink of extinction. The Yawanawa and Surui Tribes are working with Forest Trends to expand a network of “living pharmacies” by building new medicinal plant gardens in their villages and cultivating these plants in agroforestry systems throughout the surrounding tropical forest. Part laboratory and part classroom, each of the living pharmacies provides a space where elders can pass on their traditions to the next generation. The Yawanawa have the knowledge of about 2,000 medicinal plants, some of which are probably unknown to western botanists.
Losing this kind of traditional knowledge threatens more than just local community health; most of today’s pharmaceuticals are derived from natural plants extracts – at least 25 percent of modern medicines trace their roots to an estimated 50,000 medicinal plants, only a fraction of which have been studied in labs before commercial use.
Small investments can add significant value. Together with the solar power enterprise GoSol and the Surui Indigenous community, we’re piloting solar installations for drying and roasting forest fruits and nuts. A process that would otherwise take up to a week or be outsourced from the community can now be completed in less than a day, saving time and energy, and increasing producers’ profit margins.
Strong forest-based economies are not limited to food products. The artisan sector, often dismissed as “women’s work,” is the second-largest employer in the developing world, and an incredibly important source of income for women. Thanks to long-standing support from the IKEA Foundation, we have focused on indigenous women’s artisan enterprises in the Brazilian Amazon as a cornerstone of our work. Working alongside TUCUM, a socially conscious company with an e-commerce platform, we are building indigenous women’s entrepreneurial capacity and providing them with an online sales platform. To date, we have increased indigenous women’s incomes by 10%, benefiting more than 2,000 people.
Building forest-friendly supply chains and market access
Growing enterprises also need access to markets and capital. This is true for medium-to-large enterprises marketing products like Brazil nuts or açai to mainstream export markets.
But there are also excellent opportunities for small enterprises to sell specialty products like bottled aji negro sauce or smoked paiche fish to local and niche national markets.
Some Amazonian products have shown the potential to expand into larger global businesses. Sambazon, which brought the superfruit açai to the US consumer market, now has over $50 million in annual revenues.
Many, many others have the potential to become self-sustaining micro-enterprises and small community-run businesses that support conservation efforts. But these projects still need support to overcome obstacles such as market access, training, and access to capital.
Targeted support to communities with big positive conservation footprints means that even enterprises with modest revenues have the potential to make a difference over very large landscapes.
A culinary revolution that celebrates Amazon ingredients
One major opportunity lies in Latin America’s flourishing food scene. Celebrity chefs and Michelin-starred restaurants across the continent are highlighting local ingredients and traditions. This could be a powerful engine for economic development in forest communities.
Cumari is an exciting new “Rainforest to Table” food movement that provides a model for sustainable development and conservation of the Amazon rainforest. The word “Cumari” is the name of a native Amazonian chili pepper in the Tupi language. It means the “joy of flavor,” a term that embodies this new, positive approach to rainforest conservation. Cumari connects restaurants directly with small-scale producers of unique rainforest products. Both parties benefit from small-volume, personalized sales: restaurants get access to high quality local products and small enterprises get increased access to premium buyers.
Strengthening communities’ forest governance as a foundation
Markets are not a panacea. The underlying goal in building business models and supply chains for forest-friendly products is to strengthen indigenous peoples’ ability to protect their lands and cultures.
In that sense, it’s important that new income streams align with indigenous communities’ vision for securing their rights, livelihoods, and cultures – all of which must be in balance with keeping their forest homelands vibrant and standing.
We work at the village level with our indigenous partners to reflect deeply on an economic development strategy that aligns with their reality and aspirations. This kind of tailored training contributes greatly to building local economies that strike the right balance between indigenous people’s internal traditional economy of reciprocity (e.g., exchanging fish for fruit), with the outside market economy (e.g., selling Brazil nuts or cocoa beans, and always based on principles and practices of sustainability and fair trade).
As part of this deep reflection and planning, Forest Trends created the Capacity Building Program for Indigenous Territorial Governance with the support of the Norwegian Agency for Development Cooperation (NORAD). The program’s goal is to strengthen community leadership so they can address the complex challenges of governing large territories. We have successfully completed the first phase of this 12-month program in Brazil, Colombia, Ecuador, and Peru.
Making bad business models obsolete
Of course, when we fail to address the unsound incentives that drive forest loss, even the most promising projects will have a hard time succeeding. Nearly half of all tropical forest loss in the first decade of this century was illegal.
That’s why Forest Trends has dedicated programs that focus on the policy and legal strategies for protecting forests and ending corruption and illegal deforestation. We also are a widely respected source of trade and market data, which helps governments and companies make better procurement decisions. Our data shows that the timber import legislation we’ve influenced is helping keep illegally harvested wood off the market in the EU and the US. We’re also working on similar strategies for beef, soy, and palm oil.
The vision: Resilience at the forest frontier
Our work with community enterprises building more resilient food systems and supply chains has already benefited more than 12,000 people living in rural communities in South America, and has contributed to the conservation of 1.8 million hectares of rainforest.
What if we could scale these models to a whole continent? This is not a theoretical exercise. The Amazon is a likely origin of the next emerging zoonotic disease-turned-pandemic if the current rate of deforestation and violence towards the best stewards of the forest – indigenous people – continues. All of the ingredients are in place. Rampant forest loss and habitat destruction have stressed wildlife and pushed them into more interactions with humans. We’ve already seen surges in malaria and yellow fever in Brazil.
The communities that tend forests with care and traditional knowledge are our front line, not only against emerging pandemics, but climate change and biodiversity loss. Forest Trends will continue to do everything we can to support these communities in their work.r to follow our latest work.
27 April 2020 | It’s an article of faith among optimistic environmentalists that the global response to COVID-19 will hasten the demise of the science denial movement and accelerate efforts to meet the climate challenge. An overwhelming majority of veteran environmentalists surveyed by Ecosystem Marketplace, however, fear that the convulsive response to COVID-19, which is expected to reduce greenhouse-gas emissions by just over 5 percent this year, will detract from the emerging structured response needed to meet the Paris Climate Agreement’s 1.5°C (2.7°F) target, which requires emissions to fall 7.6 percent annually for the next decade.
The key factor, they say, will be how NGOs, governments, and especially media respond to the crisis.
Climate and COVID-19: A Blend of Approaches
The emerging response to the climate crisis, like the response to COVID-19, blends mandatory restrictions with voluntary efforts that go beyond the requirements of law. The survey focused primarily on the voluntary component, where dozens of leading companies, from Microsoft to Amazon to Interface Carpets, have pledged to achieve “net zero” greenhouse gas emissions at different dates in the future, in part by switching to sustainable energy, but also by using carbon finance to offset those emissions they can’t eliminate.
Earlier this year, for example, US-based Delta Air Lines announced that it would begin offsetting all of the greenhouse-gas emissions generated by all of its flights worldwide, effective March 1 – initially by purchasing verified carbon offsets generated by saving forests, restoring wetlands, and improving soil quality. It was just one of dozens of “net-zero” commitments that companies have made in the past year.
All emission reduction strategies, whether compliance-driven or voluntary, hinge on the emitter’s ability to first reduce fossil-fuel emissions – by, say, switching to renewable energy or improving practices – and only then offsetting the remaining emissions by purchasing carbon offsets.
Most of the companies that have voluntarily committed to net-zero emissions aim to at least partly do so by supporting “natural climate solutions” that protect or revive living ecosystems, like forests and wetlands, or promote sustainable agriculture, according to Ecosystem Marketplace’s “2019 State of Voluntary Carbon Markets.” But are these companies sticking with their commitments?
Interviews with corporate buyers indicate that they are, but interviews with project developers indicate that at least some companies are not.
Last week, on Earth Day, for example, Delta CEO Gareth Joyce reiterated the company’s net-zero pledge via a post on LinkedIn, declaring that “sustainability is a long-term commitment.” Microsoft, Interface, Amazon, and other companies contacted by Ecosystem Marketplace all reaffirmed their commitments. At the same time, issuance figures published by the standard-setting body Verra show strong numbers through March, by which time most of the world was already on lock-down.
The people who develop forest carbon projects, however, are bracing for lean years ahead, according to an informal survey of 13 leading project developers conducted by Ecosystem Marketplace. All respondents are regular contributors to Ecosystem Marketplace’s annual State of Voluntary Carbon Market report, and all surveys were conducted on condition of anonymity. Six of the respondents, however, agreed to follow-up interviews and many others provided subjective feedback in their responses.
Developers Fear COVID-19 Will Distract From Climate Challenge
While project developers welcomed the drop in emissions, most feared emissions would rebound after the pandemic, and that the net effect could be a loss of momentum towards meeting the climate challenge, rather than the impetus for meeting it that many pundits have proclaimed. Some also feared that many companies would lose the climate plot in the short term and then expect too much from offsetting when they finally turned their attention to the challenge again.
“Engaging with us is an intermediate step in a multi-step stocktaking to understand what emissions companies can eliminate internally and what they have to offset,” said one respondent. “Many companies were only now beginning to internalize the size and scope of the reductions that are needed, and another year or two could be detrimental if they put that process on hold.”
A staggering 71.43 percent of developers said COVID-19 was likely to distract from efforts to implement long-term solutions to climate change, while only 14.29 percent said it would raise awareness.
We’ve Seen it All Before
This sentiment echoes an observation that Dutch climate consultant Jos Cozijnsen (not a survey respondent) made in Ecosystem Marketplace earlier this month.
“The 2008 financial crisis also raised hopes for a green re-set, but that re-set failed to materialize,” he wrote. “Yes, global CO₂ emissions from fossil fuel combustion and cement production fell 1.4 percent during the crisis, but they rose 5.9 percent when it finished.”
He also pointed out that the 2008 financial crisis was only one of several economic catastrophes that seemed to promise lower emissions.
“This is a pattern we’ve seen after several previous crises, each of which came with declarations of a new, green future,” he wrote. “It’s an admirable ambition, but history shows that this doesn’t happen automatically.”
Media, NGOs, and Government Can Play a Role in Meeting the Challenge
Although respondents said COVID-19 would not automatically increase awareness of climate solutions, those who offered commentary said it could be proactively leveraged to promote awareness – but only if media, NGOs, and governments can muster the messaging to counter anti-science outfits like the Heartland Institute and Heritage Foundation.
“Sadly, the climate-change denial movement has been much more proactive in messaging than has the environmental movement,” wrote one respondent. “Media has also failed to step up, especially in covering complex solutions involving supply chains and deforestation, which leaves the general public kind of lost.”
“The media has an important role on leveraging awareness around the climate challenge in a moment that climate-related issues are set aside,” echoed another. “Beyond that, aligned governments can act to avoid a rebound in emissions when the pandemic ends. If climate related issues are taken in consideration along with economic ones.”
Current Market Uncertainty
Respondents said some of the current emission reductions might remain low – especially if distributed workplaces and conferences become permanent. Most, however, feared a rebound in industrial emissions – especially if governments move to support the fossil fuel sector at the expense of renewables.
At the same time, no respondents reported cancelled orders, although most were revising their 2020 expectations downward.
Specifically, five of the 13 project developers surveyed reported that buyers had asked to delay the delivery of existing contracts, while three reported a drop in new or expected sales and two reported both requests to delay existing sales and a loss of anticipated deals. Put another way, five reported no impact on sales yet, while eight reported some degree of impact.
Cash Crunch, Not Reduced Emissions, Forces Most Postponements
Airlines had emerged as some of the most prolific buyers of carbon offsets in late 2019 and early 2020, and all of the airlines contacted by Ecosystem Marketplace reiterated their net zero commitments. Given the dramatic reduction in air traffic, it makes sense that airlines would postpone their purchases and still meet their commitments, since they would be offsetting less emissions.
Only seven of the eight respondents reporting impacts chose to speculate on the reasons, and most pinned the blame on buyer hardship.
Juggling the Year Ahead
Only two of the companies surveyed said that the COVID-19 pandemic had no impact on their operations, but only three said they had been forced to lay people off so far. Respondents were able to submit multiple responses, and six reported they had furloughed staff with the intent of keeping them in the fold, and five reported they had implemented a hiring freeze.
The largest disruption appears to be logistical, with 11 respondents reporting the imposition of travel restrictions, but only four of these restrictions endangering the environmental quality of the projects.
Most developers are confident they can keep existing projects going for at least the next year, but a delayed recovery could mean industrial emissions begin rising just as forest projects begin to falter. If that happens, the costs of COVID-19 will be astronomical.
23 April 2020 | Microsoft drew widespread praise in January this year after Brad Smith, the company’s president, announced their climate “moonshot”.
While other corporate giants, such as Amazon and Walmart, were pledging to go carbon neutral, Microsoft vowed to go carbon negative by 2030, meaning they would be removing more carbon from the atmosphere than they produced.
By 2050, Smith added, the company was aiming to remove all of the carbon they had ever emitted since being founded in 1975.
The firm’s promises won plaudits from conservationists and climate conscious Microsoft employees, but also attracted big questions: how are they going to actually deliver this?
Much of its plans lean on nascent technology. Critics, meanwhile, see the move as a gamble aimed at justifying Microsoft’s ongoing deals with fossil fuel firms.
Microsoft releases less carbon a year than Amazon and Apple, but more than Google. The company has 150,000 employees across offices in more than 100 countries, and is still focused on developing the software and consumer electronics that made them a household name – Windows, PCs, Xbox. But after a temporary slump following their heyday in the 1990s, they have also once again become innovators, developing world-leading artificial intelligence (AI) and cloud computing products.
The company hopes to bring that innovative approach to its climate policies, in part by widening how it calculates its carbon footprint, beyond most corporate responsibility plans. Historically, Microsoft has only counted those emissions that fall within the scope of their own business operations – employee travel, company vehicles, heat and electricity in company buildings, and so on.
From now on, it plans to take responsibility for the emissions produced by its entire supply chain, including the full lifespan of the products it makes and the electricity that customers may consume when using its products.
Meanwhile, increasing the scrutiny on Microsoft’s plan are its dealings with fossil fuel companies, which have been highlighted by some as evidence of hypocrisy as it makes climate pledges. In 2019 alone, the technology company had entered into long-term partnerships with three major oil companies, including ExxonMobil, that will be using Microsoft’s technology to expand oil production by as much as 50,000 barrels a day over the coming years. The staggering amount of carbon this would release into the atmosphere would not be included on Microsoft’s expanded carbon ledger.
For Microsoft, however, partnering with oil companies is not considered hypocritical. The company is hedging its climate bets on carbon capture and removal technologies that they believe will be able to offset some of the environmental harm caused by fossil fuels during the transition to a more sustainable future, despite such technologies being still in their nascent stages and not yet proven to work at scale.
Those who devised the plan at Microsoft argue that they are responding directly to a new reality: cutting emissions is not enough and all routes to non-catastrophic temperature increase will also require removing carbon from the atmosphere. So, as well as shifting to a 100% supply of renewable energy for all of their data centers, buildings and campuses by 2025, Microsoft outlines a number of carbon reduction methods it is backing to try and hit its bold targets.
To begin, Microsoft will focus on protecting forests and planting trees to capture carbon. This strategy has long been used to offset emissions, but Microsoft is hoping to improve their outcomes by using remote-sensing technology to accurately estimate the carbon storage potential of forests to ensure no major deforestation is occurring in their allotments. To achieve these goals, Microsoft will be partnering with Pachama, a Silicon Valley startup that will survey 60,000 hectares of rainforest in the Amazon, plus an additional 20,000 hectares across north-eastern states of the US for the company.
According to Kesley Perlman, a climate campaigner at the forest conservation NGO Fern, Microsoft’s commitment to hi-tech reforestation is encouraging, but she stressed that conservation is a complex, multifaceted process that goes beyond technical issues. “It’s not only about how much carbon a forest can hold but also who traditionally uses the forest, how they might be kept out, and how biodiversity will be prioritized,” she said.
Biomass energy carbon capture storage
Microsoft will initially focus on nature-based solutions to reduce their carbon footprint over the next five or so years. But in order to start drawing more carbon from the atmosphere than they emit by 2030, it will need to shift to technology-based solutions that can scale up and accelerate carbon removal.
To this end, Microsoft is betting on biomass energy carbon capture storage, otherwise known as BECCS, to transform how energy is generated. Instead of burning coal, a BECCS power plant burns biomass, like wood chips. The carbon produced when burning the biomass is captured before it is released into the atmosphere and then injected at a very high pressure into rock formations deep underground. Not only does this remove carbon from the natural cycle, the biomass absorbs CO2 as it grows.
A world powered by biofuel, however, raises two looming questions. First, scientists are not yet certain if biomass energy will be carbon neutral.
The second concern is that the transition from coal to biofuel would require setting aside vast tracts of arable land – some estimates say one to two times the size of India. According to climate campaigner Perlman this would mean that the energy industry would probably have to compete with food production in a world where 10 billion people will need to be fed, while vastly enlarging industrialized plantations and reducing biodiversity. “We would likely see massive land use change and massive private purchases of land, the knock on impacts of which could be quite dangerous,” she said.
Direct air capture
Perhaps the most futuristic of the technologies outlined in Microsoft’s carbon negative plan is direct air capture (DAC). This involves machines that essentially function like highly efficient artificial trees, drawing existing carbon out of the air and transforming it into non-harmful carbon-based solids or gasses.
While the image of air-conditioner-like machines sucking carbon out of the air is captivating, capturing CO2 directly from the atmosphere requires a lot of energy and is very expensive. In 2011, extracting carbon from the air cost $600 a ton of CO2. In 2018, estimates brought this down to anywhere between $94 to $232 a ton. But given that Microsoft expects to emit 16m metric tons of carbon this year, if they were to reach carbon zero using only DAC, their bill might cost as much as $3.5bn.
According to Lucas Joppa, chief environmental officer at Microsoft, a large part of the reason why carbon removal remains so expensive is because the markets around these technologies are still immature. The company’s strategy over the coming decades is maturing these markets through intensive and directed investment. “We’re making a bet on certain technologies that don’t exist at the scale or price point we need them to,” he said. “But if we want to get them, we need to start investing.”
The company, he said, already has a model for raising funds internally to support climate innovation. In July 2012, Microsoft became one of the first companies to institute an internal carbon price, charging different divisions in the business $15 a metric ton of carbon emitted. The funds raised were then used to pay for sustainability improvements, which helped the company achieve their goal of going carbon neutral.
Previously, this carbon price only extended over emissions Microsoft was directly responsible for. According to their new plan, in July this year Microsoft will extend this internal carbon price over emissions produced across direct and indirect emissions. The increased revenue raised from the expanded internal carbon tax, along with a $1bn climate innovation fund, will be used to invest in capture and removal technology. “What we’re going to do is put this money in the market in a way that is highly additional,” Joppa said. “This is how we’re going to get nature-based solutions and tech solutions at a price point and scale we need.”
Microsoft’s plan for intensive investment in this industry is exciting for those working in the field. Klaus Lackner, a theoretical physicist working on DAC, has been arguing since the 1990s that carbon removal is the only feasible way to stop significant temperature rises. “We’ve shown that this method is technologically feasible, but nobody has wanted them,” he said. “Microsoft have said ‘we get it’. It will cost them money, but it will allow the technologies to come online and for the next company to follow their footsteps.”
While the technologies that Microsoft are betting on are still in their nascent stages, in the past few years there has been some encouraging progress in the negative emissions industry. Lackner and Arizona State University recently signed a deal with Silicon Kingdom, an Irish-based company, to manufacture his carbon-suck machines. The plan is to install them on wind and solar farms, and then sell the captured carbon to beverage companies to make carbonated drinks. In the UK, Drax power plant, which was once among Europe’s most polluting, transitioned from coal to biofuel this year.
But many attempts at scaling carbon negative projects have also failed. The Kemper Project in Mississippi, which was billed as America’s flagship carbon capture project, was abandoned in 2017 – it was $5bn over budget, three years late and still not operational.
Given the not insignificant risk of failure, some propose that relying on nascent or future technology as a solution to the climate crisis represents a moral hazard – the promise of carbon removal functions as an incentive for governments and major polluters to not change their behavior now.
According to Chris Adams, a tech worker who organizes an online community of technology professionals agitating for climate action from within the industry, the fact that Microsoft is still partnering with big oil companies demonstrates the moral hazard in action. “They are protecting the fossil fuel industry from changing while the rest of the world will pay most from this gamble if it fails in the long term,” he said.
Adams added that many of the encouraging ideas around carbon reduction in Microsoft’s plan have come from internal organizing from concerned employees, but that this mostly goes unacknowledged in Microsoft’s official vision. Emphasizing future technology while overlooking activism in the present, Adams said, represents a certain way of approaching problems that is typical of technology companies. “If you have spent the last 10 years amassing influence by approaching most problems with technology it’s understandable you see all problems through this lens, particularly if you don’t have to have conversations about power,” he said.
When asked about this concern by the Guardian, Microsoft’s Joppa responded that in the short term, the energy demands of a growing global population will probably still need a mix of renewable and traditional energy sources. By remaining in discourse with these industries, he said, Microsoft hopes to help them change and transition to a better model in the future. “It’s extremely hard to lead if there’s no one there to follow,” he added.
As to whether the technology outlined in their plan will scale, he said there is inherent risk, but this is why they call it a “moonshot”. “When it comes to our plan it’s not like we’ve got it all figured out,” he said. “We’re just trying to do what the science says the whole world needs to do. There’s really no other choice.”
22 April 2020 | Nineteen-seventy was a simpler time. (February was a simpler time too, but for a moment let’s think outside the pandemic bubble.)
Simpler because our environmental troubles could be easily seen. The air above our cities was filthy, and the water in our lakes and streams was gross. There was nothing subtle about it. In New York City, the environmental lawyer Albert Butzel described a permanently yellow horizon: “I not only saw the pollution, I wiped it off my windowsills.” Or consider the testimony of a city medical examiner: “The person who spent his life in the Adirondacks has nice pink lungs. The city dweller’s are black as coal.” You’ve likely heard of Cleveland’s Cuyahoga River catching fire, but here’s how New York Governor Nelson Rockefeller described the Hudson south of Albany: “one great septic tank that has been rendered nearly useless for water supply, for swimming, or to support the rich fish life that once abounded there.” Everything that people say about the air and water in China and India right now was said of America’s cities then.
It’s no wonder that people mobilized: 20 million Americans took to the streets for the first Earth Day in 1970—10 percent of America’s population at the time, perhaps the single greatest day of political protest in the country’s history. And it worked. Worked politically because Congress quickly passed the Clean Air Act and the Clean Water Act and scientifically because those laws had the desired effect. In essence, they stuck enough filters on smokestacks, car exhausts, and factory effluent pipes that, before long, the air and water were unmistakably cleaner. The nascent Environmental Protection Agency commissioned a series of photos that showed just how filthy things were. Even for those of us who were alive then, it’s hard to imagine that we tolerated this.
But we should believe it, because now we face even greater challenges that we’re doing next to nothing about. And one reason is you can’t see them.
The carbon dioxide molecule is invisible; at today’s levels you can’t see it or smell it, and it doesn’t do anything to you. Carbon with one oxygen molecule? That’s what kills you in a closed garage if you leave the car running. But two oxygen molecules? All that does is trap heat in the atmosphere. Melt ice caps. Raise seas. Change weather patterns. But slowly enough that most of the time, we don’t quite see it.
And it’s a more complex moment for another reason. You can filter carbon monoxide easily. It’s a trace gas, a tiny percentage of what comes from a power plant. But carbon dioxide is the exact opposite. It’s most of what comes pouring out when you burn coal or gas or oil. There’s no catalytic converter for CO2, which means you have to take down the fossil fuel industry.
That in turn means you have to take on not just the oil companies but also the banks, asset managers, and insurance companies that invest in them (and may even own them, in the wake of the current economic crash). You have to take on, that is, the heart of global capital.
And so we are. Stop the Money Pipeline, a coalition of environmental and climate justice groups running from the small and specialized to the Sierra Club and Greenpeace, formed last fall to try to tackle the biggest money on earth. Banks like Chase—the planet’s largest by market capitalization—which has funneled a quarter-trillion dollars to the fossil fuel industry since the Paris Agreement of 2015. Insurers like Liberty Mutual, still insuring tar sands projects even as pipeline builders endanger Native communities by trying to build the Keystone XL during a pandemic.
This campaign sounds quixotic, but it seemed to be getting traction until the coronavirus pandemic hit. In January, BlackRock announced that it was going to put climate at the heart of its investment analyses. Liberty Mutual, under similar pressure from activists, began to edge away from coal. And Chase—well, Earth Day would have seen activists engaging in civil disobedience in several thousand bank lobbies across America, sort of like the protest in January that helped launch the campaign (and sent me, among others, off in handcuffs). But we called that off; there’s no way we were going to risk carrying the microbe into jails, where the people already locked inside have little chance of social distancing.
Still, the pandemic may be causing as much trouble for the fossil fuel industry as our campaign hoped to. With the demand for oil cratering, it’s clear that these companies have no future. The divestment campaign that, over a decade, has enlisted $14 trillion in endowments and portfolios in the climate fight has a new head of steam.
Our job—a more complex one than faced our Earth Day predecessors 50 years ago—is to force the spring. We need to speed the transition to the solar panels and wind turbines that engineers have worked so mightily to improve and are now the cheapest way to generate power. The only thing standing in the way is the political power of the fossil fuel companies, on clear display as President Trump does everything in his power to preserve their dominance. That’s hard to overcome. Hard but simple. Just as in 1970, it demands unrelenting pressure from citizens. That pressure is coming. Indigenous nations, frontline communities, faith groups, climate scientists, and savvy investors are joining together, and their voices are getting louder. Seven million of us were in the streets last September. That’s not 20 million, but it’s on the way.
We can’t be on the streets right now. So we’ll do what we can on the boulevards of the Internet. Join us for Earth Day Live, three days of digital activism beginning April 22. We’re in a race, and we’re gaining fast.
21 April 2020 | S&P Dow Jones Indices (“S&P DJI”) this week launched the S&P Eurozone LargeMidCap Paris-Aligned Climate Index and the S&P Eurozone LargeMidCap Climate Transition Index.
The new S&P Paris-Aligned & Climate Transition (PACT) Indices have been designed with a holistic approach to incorporate a broad range of climate and sustainability-based objectives. These include the climate objectives and minimum standards for the European Union (EU) Paris-Aligned Benchmark (PAB) and EU Climate Transition Benchmark (CTB) as specified by the EU Sustainable Finance Technical Expert Group (TEG) in its September 2019 Final Report on Climate Benchmarks and Benchmarks’ ESG Disclosure.
The EU created the PAB and CTB classifications and standards not only to fulfill risk reduction goals but also to create opportunities that will emerge as European economies transition to a low-carbon, climate resilient and more resource efficient one. In addition, the indices incorporate the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures’ (TCFD) recommendations for assessing climate-related risks, opportunities and financial impacts.
“There is a growing urgency in Europe and globally to identify solutions that address the negative consequences companies and institutions face due to climate change. The PACT Indices provide transparency with respect to these consequences and investment strategies that address climate change risks and opportunities,” said Reid Steadman, Global Head of ESG Indices at S&P Dow Jones Indices.
The PACT Indices utilize rich proprietary datasets and analytics from Trucost, part of S&P Global. The indices measure the performance of eligible equity securities from the S&P Eurozone LargeMidCap Index, selected and weighted to be collectively compatible with a 1.5°C global warming climate scenario and to meet several other climate-focused objectives. The indices are developed to help investors and other market participants align their investments and manage climate-related risks and opportunities.
In the coming months, S&P DJI plans to launch additional Paris-Aligned and Climate Transition indices based on its other widely tracked regional and country-specific indices used in Europe, the U.S. and developed markets.
The research and methodology on the S&P Paris-Aligned & Climate Transition (PACT) Indices are available at www.spdji.com.
20 April 2020 | REUTERS | Royal Dutch Shell last week laid out the oil and gas sector’s most extensive strategy yet to reduce greenhouse gas emissions to net zero by 2050, stating its plans depended on its customers also mitigating emissions.
Oil and gas producers have announced deep spending cuts as oil prices have touched 18-year lows and drastic restrictions on movement to slow the spread of the new coronavirus have destroyed demand.
Chief Executive Ben van Beurden told investors the crisis would not distract it from the company’s shift to low-carbon energy as it braces for “a complete overhaul” over the next 30 years.
The raised ambitions put the Anglo-Dutch company – at least on paper – ahead of the most progressive of its rivals, including BP and Italy’s Eni.
“We aim to be a net-zero emissions energy business by 2050 or sooner,” van Beurden said.
The Anglo-Dutch company previously had long-term intensity based targets, rather than goals based on absolute emissions reductions.
It said on Thursday it planned to fully offset carbon emissions from its own oil and gas production and the energy it uses by 2050, in what are known as Scope 1 and Scope 2 emissions.
Those emissions do not include the much larger category of greenhouse gases emitted from fuels and products it sells to customers, such as jet fuel and gasoline, known as Scope 3.
The company however said it will “pivot towards serving businesses and sectors that by 2050 are also net-zero emissions,” which it said means its absolute emissions, including Scope 3, should be fully offset.
Energy companies’ carbon emission reduction targets vary greatly in scope and definition.
BP aims to bring net emissions from the barrels from its own operations throughout their life cycle to zero by 2050, including a 50% reduction of the carbon intensity of all the products it sells, which include products from oil made by other companies.
Shell also expanded its aim to cut the carbon emission footprint from the energy products its sells, an intensity-based measure, by around 65% by 2050, and by around 30% by 2035.
To get to overall net-zero emissions, including Scope 3, van Beurden told a conference call that “our customers can and will themselves take action on the emissions created by their use of our energy products.”
“As we get closer to 2050, we will work ever more intensely with customers who still have emissions that they have not fully mitigated…to find ways to help them do so. That might be through actions they take themselves or we may agree to mitigate those emissions on (their) behalf,” he added.
Mitigation would rely on offsetting emissions, for example by planting trees, or carbon capture technology, which is not currently used at commercial scale.
Last year Shell spent roughly 8% of its $24 billion budget on low-carbon energy. Barclays analysts said it was likely that spending on oil and gas exploration would fall.
Shell also set binding targets to reduce its net carbon footprint in the three years to 2022 by 3% to 4% from a 2016 baseline.
In Line With Paris?
Investors welcomed the announcement, but differed on whether it was in line with the 2015 Paris climate agreement to limit global warming to well below 2 degrees Celsius by the end of the century.
“This package of enhanced steps, set against the current other commitments in the oil and gas sector, significantly jumps Shell to the leading global position,” Carola van Lamoen, head of Robeco’s Active Ownership team, told Reuters.
Mark van Baal, founder of activist group Follow This, said the new goals were not enough.
“Shell’s Board is still failing in its responsibility to show leadership at a time of devastating climate change,” he said.
Shell also recommended investors vote against a climate resolution filed by Follow This ahead of its annual general meeting in May calling for more aggressive climate steps.
“A credible Net Zero plan from Shell would start with a commitment to stop drilling for new oil and gas,” said Richard George, head of Greenpeace UK’s climate campaign.
17 April 2020 | It’s not quite a gazillion or a bajillion, but a quadrillion dollars still sounds unreal – like the numbers second-graders make up when bragging about the pennies in their piggy banks.
But $1 quadrillion is a very real number that translates into a thousand trillion, or more than 100-times the $9 trillion the International Monetary Fund says COVID-19 will cost us over the next two years.
$1 quadrillion is also what researchers say climate change will cost us over the next 80 years if we fail to meet the terms of the Paris Climate Agreement, according to new modeling published this week in the journal Nature Communications.
That translates into $12.5 trillion per year over 80 years, or more than twice per year what COVID-19 is hitting us with now. The difference from the perspective of a middle-aged geezer like myself, is that while COVID-19 is primarily hitting our parents and grandparents, climate change will hit our children and grandchildren.
In the paper, which is entitled “Self-preservation strategy for approaching global warming targets in the post-Paris Agreement era,” climate researchers, led by a team from the Beijing Institute of Technology’s Center for Energy and Environmental Policy Research, simulated the costs of dealing with climate change under several scenarios and concluded that if we prevent the world from warming by 2°C, which is the bare minimum target of the Paris Agreement, then global GDP will increase by $336 trillion over the next 80 years. If we keep it from warming 1.5°C, it will increase $422 trillion.
But if we fail to meet the Paris Agreement goals and instead just stick with the national action plans (NDCs, for “Nationally-Determined Contributions”) already submitted, we’re looking at economic shrinkage of anywhere from $126 trillion to $616 trillion.
We’re looking, in other words, at an average annual GDP loss of 0.57 percent annually, or a perpetual state of recession for the next 80 years – and that’s if countries meet their NDCs. If they don’t, then the loss plunges to $790 trillion—which is more than seven times the size of the current global economy.
Obviously, we’ll see a rebound first – a bit of a respite after we recover from COVID-19 but before the rising seas and burning trees really start hitting us – and this is when the tough decisions begin, because the Intergovernmental Panel on Climate Change (IPCC) tells us that we’ll have to reduce greenhouse-gas emissions an average of 7 percent per year between now and 2030 if we’re to have any hope at all of meeting the Paris targets.
As with COVID-19, we can’t say they didn’t warn us. Just as climate scientists have long been sounding the alarm on greenhouse-gas emissions, so too has the World Health Organization (WHO) been warning us of a global pandemic. Indeed, WHO Director General Tedros Adhanom Ghebreyesus used the outbreak to remind us way back on February 3 that an ounce of prevention is worth a pound of cure.
“For too long, the world has operated on a cycle of panic and neglect,” he said. “We throw money at an outbreak, and when it’s over, we forget about it and do nothing to prevent the next one.”
If we burn the climate, there won’t be a next one.
16 April 2020 | As the coronavirus pandemic continues to wreak havoc, the world’s energies are rightly focused on efforts to contain the virus and manage the economic fallout. Yet, in the background, the climate emergency remains as urgent as ever.
Indeed, climate-exacerbated shocks may well overlap with the COVID-19 crisis, disrupting efforts to contain the virus, stretching emergency services beyond the breaking point and delaying economic recovery.
For example, on April 8, a major cyclone battered Pacific islands including Fiji, knocking out power and damaging infrastructure in a country already consumed with COVID-19 containment efforts. In New Orleans, where emergency and health services are laboring under tremendous pressure to cope with the pandemic, residents have watched the Mississippi River rise by a foot within a week; more heavy rains threaten severe flooding, potentially compounding the emergency. Meanwhile, forecasters are projecting a “significantly above normal” Atlantic hurricane season, raising the prospect of communities having to fight both major storms and the virus.
To manage the twin threats of the coronavirus pandemic and climate change, building resilience against both is imperative and urgent. We are going to have to multitask on this one, as delay will cost lives and livelihoods.
But how to do so, in the face of a recession, falling government revenues and huge pressure on public budgets to fund multiple priorities? Investments in COVID-19 response and in climate change resilience must work together and reinforce each other, rather than compete for resources. Here are three ideas on how to do it.
Invest in Health Care that Addresses Both Pandemics and Climate Change
Climate change is already a public health threat, one that will grow with time. Rising average global temperatures are exposing more and more people to dangerously high temperatures every year. Wildfires degrade air quality to the detriment of human health, as they have in California and Australia.
Heavy rains and floods can carry pathogens and toxic chemicals that contaminate drinking water supplies. Major storms regularly inundate emergency rooms with people injured by violent winds. And warmer temperatures are expanding the geographic reach of vector-borne diseases such as zika, dengue and malaria.
Enter the coronavirus.
In the coming weeks and months, billions of dollars will flow into healthcare sectors around the world as part of the coronavirus response. Some of this spending will address immediate shortages of medical personnel, coronavirus testing, life-support equipment and protective gear.
But other investments will go into strengthening countries’ healthcare infrastructure, information technology and surge capacity. Many of these investments could simultaneously make communities more resilient to both pandemics and climate change.
Consider, for example, investments in disease surveillance, including the development of case databases that can be accessed instantly by all the relevant government agencies and civil society organizations in a country. These will help detect viral outbreaks as well as climate change-driven shifts in vector-borne diseases.
Another example is the Rambam Health Care Campus in Israel, which has an underground parking lot that can be converted into a 2,000-bed, full service medical clinic in 72 hours. Such facilities can serve to respond quickly to a pandemic, as well as to provide treatment in case of a climate-related disaster.
At the same time, providers of climate finance should invest more in public health.
Our research suggests that dedicated climate funds, such as the Green Climate Fund, the Climate Investment Funds, and the Adaptation Fund, have historically underfunded activities in the health sector relative to what countries say they need to prepare for climate change. These organizations should identify investments that help countries to deal with both climate-related impacts and pandemics.
For example, the Caribbean island of St. Vincent and the Grenadines launched the Georgetown Smart Hospital Project. Its goal is to retrofit medical facilities to withstand hurricanes and continue to provide service during extreme weather. In case of a pandemic, medical treatment must be delivered, regardless of climate-related disasters. The Texas Medical Center in Houston made similar investments after Tropical Storm Allison in 2001.
Strengthen the Disaster Risk Finance Architecture
In the aftermath of a disaster – whether it’s a pandemic or a climate-related catastrophe – rapid finance is key for a successful response. Governments have access to a variety of tools to help them finance disaster response. These tools include national disaster funds, contingent credit lines (fast-disbursing loans), parametric insurance products (insurance policies that trigger automatically when certain conditions are met) and catastrophe bonds (like insurance policies, but traded in markets).
Countries with the most effective disaster risk finance (DRF) strategies typically deploy combinations of these tools to protect against the various layers of risk a country faces, matching risks and tools based on what is most cost-effective.
Over the past decade and a half, a disaster risk finance architecture has emerged to serve mostly low- and middle-income countries, focusing primarily on earthquakes, hurricanes, floods and drought. The same or similar instruments could be used to manage pandemic risks.
This is beginning to happen.
Countries are tapping World Bank contingent credits – typically used to raise fast cash after hurricanes and floods – to access to over $1.2 billion in funds for COVID-19 response. Though currently few in number, products built expressly for pandemics deserve increased attention.
For instance, African Risk Capacity (ARC), a regional risk pool created originally to provide drought insurance to African governments, is developing a product to help governments respond to outbreaks of Ebola, Lassa fever, Marburg, meningitis and – as ARC recently announced – COVID-19.
Not all disaster risk financing products will be a good fit for pandemic response – the World Bank’s 2017 pandemic catastrophe bond has been widely criticized, for example – but those that can deliver money quickly before impacts become widespread could be valuable.
The problem is that the DRF architecture suffers from several shortcomings and needs to be strengthened urgently. As we point out in a recent paper, only a minority of countries with access to these DRF tools is actually deploying them in combination to cover their catastrophic risks. As a result, many countries remain underinsured and vulnerable.
Strengthening the system will require several things. Boosting the amount of cheap loans and grants available to help countries assess and measure their risks will be key, as will developing new DRF products and services. Making existing products more affordable is also necessary.
In our paper, we introduce three options for how this can be done quickly and effectively: expanding the role of the World Bank’s International Development Association, promoting the role of regional multilateral development banks, and creating a new and scaled-up DRF vehicle.
Put Disaster-responsive Social Safety Nets in Place
While access to rapid finance for post-disaster response is critical, it’s not enough. Governments need systems in place to deliver those resources to the communities that need them the most. Social protection programs that can quickly and automatically scale up after a disaster – be it a pandemic or a climate-related disaster – offer one promising approach.
Such programs provide rapid, additional cash to supplement income to enable households to cover immediate crisis-response costs. For example, Kenya’s Hunger Safety Net Programme (HSNP) normally provides cash transfers to households that can’t afford to buy enough food. During droughts, the HSNP automatically scales up to provide emergency cash to additional households.
Disaster-responsive social safety nets could be equally beneficial in a pandemic, when many households face unexpected loss of employment and income, as well as unexpected medical expenses. Emergency cash transfers could help people avoid dangerous choices between safeguarding their health and the health of others and earning enough to pay for basic necessities. While pioneered in developing countries, the principle can be applied in developed countries too.
We find ourselves in uncharted territory, but tools and knowledge that already exist for climate resilience should also be deployed to help communities cope with pandemics, and measures to protect us from this and future pandemics can also help build resilience to climate impacts. While responding to the current coronavirus crisis must be everyone’s primary concern, we should not lose sight of how actions and investments today could potentially prepare us for other crises, including the looming climate crisis.
8 April 2020 | A letter to the World Health Organisation this week, signed by almost 250 environmental organisations, points to a solution to prevent future Corona virus outbreaks – a massive crackdown on wildlife trade markets worldwide. But will banks, insurers and investors begin to recognise this health crisis for what it is – a symptom of a US$ trillion dollar trade in environmental degradation and wildlife crime. C-19 demonstrates that it is time for the financial sector to think “beyond carbon”, and put nature-related impacts and dependencies firmly onto their risk map. Here’s why.
Economists estimate the economic fall out from the COVID-19 virus pandemic could approach $10 trillion dollars, or around one eighth of global GDP. To prevent a recurrence of this crisis, we need to look less into human health, than into the collective blindness among regulators and within the financial sector of the huge dependencies the global economy has on biodiversity, and the devastating impacts on us all when our effect on these dependencies, becomes increasingly unsustainable. COVID-19 is nature’s $10 trillion dollar bite back, and this is just the beginning.
The World Economic Forum’s January report ‘Nature Risk Rising’ acutely charts the financial risks of messing with nature. Its January Global Risks report placed biodiversity as the 3rd highest future risk for business impact in 2020. At the Forum in Davos this January, I found few in the financial sector taking the issue of biodiversity risk seriously. With financial markets plunging and lenders struggling to keep the economy moving, many are now asking how could this happen? An understanding of how and why an invisible microbe that lives harmlessly in wild animals has gone viral, threatening us all, may help avoid such an attack on humanity but also it can encourage asset owners to create a new policy to ‘do no harm’ to nature.
Zoonoses is a term used by biologists to describe reservoirs of pathogens normally living in domestic livestock and wild animal populations, that very rarely can transfer to humans. Examples include Ebola, HIV, and Leptospirosis. For such a zoonotic transfer to occur, an intensive situation needs to be created with a high concentration of the primed pathogen and humans in close and often bloody proximity. Poorly managed wildlife markets provide the perfect conditions for the necessary transfer and mutations to occur, and none better than in China. Here bats, snakes, and pangolins are served up in a daily blood bath alongside every other imaginable creature, many illegally sourced from across the world.
SARS-CoV-2, the source of the COVID-19 pandemic, is a form of Severe Acute Respiratory Syndrome and the 7th coronavirus known to infect humans. These viruses are common in bats and have been transferred to humans before, possibly mutating through camels in the Middle East, as MERS. A more transmittable form, popularly known then as SARS, first broke out of the Chinese wildlife markets in 2002, infecting at least 8000 humans across 29 countries. The 2019 version is far more potent. At the time of writing confirmed infections are rising over 1.2 million, with more than 70,000 deaths recorded across 208 countries. The Corona viral cat is now well and truly out of the pangolin bag.
So how are bats or pangolins involved and why did the jump occur now? For thousands of years, pangolins, scaly anteaters with prehensile tails, have roamed the forests of South East Asia and Africa, mostly preyed upon by leopards, lions and tigers. In the 1980’s and 90’s when increasing human populations and unsustainable investments in agriculture delivered deforestation, this brought a growing supply of illegal bush meat to increasingly prosperous city markets. As prosperity grew in China and Asia generally, traders to the wildlife markets of Wuhan, and many other cities spread across the region, began to take an interest. In the last decade the covert supply chain into these markets has delivered up to 100,000 pangolins a year, making it the most illegally traded mammal in the world. Pangolin parts in black markets can reach US$3000 per kilo for their scales; a kilo of meat fetches $300 . Their scales, equivalent to our fingernails, are touted as medicine. This is not a trade for the poor, but the rich.
The armoured nature of pangolins and their ability to curl up into a defensive ball, makes them ideal to conceal in a box. Terrified, weakened, and infecting each other, they are transported thousands of miles away from their homes, to China. Here they disgorge millions of primed Corona viruses around wildlife market butcheries also serving up bats. The vast Huanan ‘wet’ market in Wuhan is not all bad. It serves thousands of people their daily fish, fruit and veg. But the meat section is extraordinary. The Corona virus was first found to be prevalent where wild animal parts are sold, not in the rest of the market.
Corona viruses are highly adaptable microbes and dense populations of humans, without antibodies to combat them, eventually make ideal testing grounds. Dr Li Wenliang, a 34 year old ophthalmologist in Wuhan, along with 7 other colleagues, first alerted the Chinese public to the threat last November. Following, a reprimand from Chinese police for spreading “false rumours”, he later died of the virus.
So can science prove the link? In recent months, several laboratories have investigated the deadly Corona virus genome in humans . The nucleic acid sequences sampled from animal viruses found in the genus Rhinolophus, or horsehoe bats, offer a good match. One strain, known as RaTG13, from a cave in Yunnan, in SW China, has a 96% match with SARS-CoV2, the correct name of the virus. Bats are probably the reservoir; but some differences with the human Covid virus, suggests modification via another animal. What indicates the pangolin, as a potential source or intermediary, is that it’s Corona virus has an especially good ability to bind onto human cells, which the bat version lacks. Such intermediaries, might pre-dispose the virus to make its jump to humans. The earlier SARS strain, also from bats, had a 99.8% match with one found in civet cats, another illegally traded species in Chinese markets. Only an unnatural cocktail that brings all of these wildlife elements together, alongside humans, can turbocharge the conditions needed for multiple mutations to take place, one of which eventually outfoxes our immunity – and so the virus explodes.
Could the virus have been constructed by humans and then escape from a laboratory? Both the American Military and the Institute of Virology in Wuhan have been accused in the media . The science says no. Highly skilled lab technicians manipulating viruses, are not nearly as adept as nature is at re-designing them. Technicians usually leave a lab-based backbone of chemical footprints. None of these have been found in the human version of C-19.
Humans may not have created the corona virus, but we have cultured the un-natural conditions needed for nature to detonate a a $10 trillion dollar time bomb into our economy. The cost of preventing the economic impact, to say nothing of the damage to families, would have been small. China has at last acted to shut down wildlife markets across the country,15 years late. Might this week’s letter to WHO stimulate more comprehensive global action? China is by no means alone in harbouring such markets.
Degradation of nature and the scale of environmental crime, plus the laundering of its proceeds, is far greater than the wildlife market trade alone. Last year’s Refinitiv report on financial crime values illegal wildlife tracking at between US$15-23bn a year, making it the 4th largest illegal trade behind drugs. A 2016 UNEP-Europol report estimated direct environmental crime including logging, fishing and mining to be US$90-260bn per year. A 2019 World Bank report estimates the full costs of environmental crime including the loss of ecosystem services upon which the economy depends, to be in the range of US$1-2 trillion per year globally . 90% of the costs were from illegal deforestation and fishing.
Corona is an acute reminder of the consequences coming the financial sector’s way, if humanity continues to mess with nature. It should be a wake up call to banks insurers, investors and business, that the ‘E’ of ESG should not be confined to carbon. A Taskforce on Nature-related Financial Disclosure (TNFD) is in the works, as a follow on to the TCFD. The time to do this is now because: Nature-related risk affects many sectors; can be bigger than carbon risk; and can take a bite out of our economy faster than climate. Nature-related risk cannot wait, whilst we fix climate risk.
As I write, my dear friend Robin Hanbury-Tenison, explorer and Chairman of Survival International, is in a coma fighting C-19. Ironically, the first Chapter of his book, ‘Taming the Four Horsemen’, released a few months ago before the outbreak engulfed Europe, is called: The Problem: Pandemics . To keep the White Horseman of pestilence at bay, it is time our economy re-invented itself to maintain Earth’s immune system, and not to degrade it.
8 April 2020 | For the first time in history the world is facing multiple, interconnected global crises. People have only just begun to come to terms with the climate crisis and its far-reaching implications, and now, due to the rapid spread of COVID-19, we are more fully realizing some the other risks we face from living in a globalized world.
These two crises are not independent of one another. COVID-19 originated from an animal source in Wuhan, China. Scientists have already highlighted the increased risk of new diseases spilling over from animals to humans as a result of human impacts on natural habitats. Given the highly contagious and serious health impacts of COVID-19, many organizations around the world are temporarily closing down or reducing their operations. However, we cannot afford to drop our response to the climate crisis. Given so many nature-based projects are inherently tied to on the ground activities which demand social interaction, is it possible we can responsibly tackle both the climate crisis and public health crisis at the same time?
The answer from Taking Root is emphatically yes. On Wednesday 18th March Nicaragua confirmed its first case of COVID-19. Taking Root’s primary concern during this public health crisis is to ensure the safety and health of our employees and the communities we work with. As of March 19th 2020 we will continue all our operations on the ground and are on track to complete our largest planting season to date. More importantly, as one of the largest outreach organizations in Nicaragua, we have begun using our daily activities to communicate and educate the rural communities we work with on COVID-19 and how they can stay safe and healthy.
Taking Root has over 45 staff on the ground in the Northwest of Nicaragua who spend much of their time visiting the thousands of farmers we work with to help them grow trees on their farms. These farmers are disconnected from public health information and services. Given their low incomes, physically intensive work, close home life settings and the fact that many are over the age of 50, they are extremely vulnerable to the potential impacts of a virus like COVID-19. We are implementing a number of policies so that our staff can stay safe, while using our position to help prevent the spread of COVID-19 throughout rural communities in Nicaragua.
What policies are Taking Root putting in place at its Nicaragua offices?
All office-based workers who can are now working from home
Anyone who is sick has been told they must stay at home and self-isolate for 14 days
Field staff who normally plan their daily activities as a team in the office will now be doing so remotely through group phone calls
Office workers that provide essential services like paying farmers are maintaining at least two metres distance between one another
We are changing the way we run large group team meetings. For the foreseeable future we have:
Cancelled all large group meetings
Where possible, we are moving group meetings to Whatsapp which can be managed centrally from the office by a small number of people
We are putting up educational signage at the entrance of all of our offices to recommend best-practice such as regular hand-washing and social distancing.
We are ensuring alcohol wipes and sanitizer are on hand for regular use from anyone entering or working in the office
Are the Taking Root Nicaragua offices still open to external visitors?
Taking Root’s offices are visited regularly by farmers. We have moved the meeting point for any external visitors outside and will be practicing social distancing, maintaining 2 metres apart between all staff and visitors.
How is Taking Root helping farmers and their families prevent the spread of COVID-19?
Taking Root staff will continue to visit farmers. However, they will:
travel solo to avoid close contact with other staff members
maintain a minimum of two metres distance from farmers and avoid all physical contact
use farmer visits as an opportunity to discuss with farmers and provide them and their families with information explaining the risks of COVID-19 and what they can do to keep safe as well as Taking Root’s policies for the foreseeable future
We will continue to use the latest public health advice to inform our policies and procedures. In the meantime, we will do all we can to serve and support our staff and the farmers we work with.
7 April 2020 | In 2019 Duncan Austin coined the term “greenwishing” to describe environmental and sustainability initiatives with little likelihood of material impact. Does #pandemicwishing now need to join the business risk management vocabulary as well?
The COVID-19 pandemic has overwhelmed the conventional risk management strategies that companies may have had in place to deal with such an event. That’s because COVID-19 represents a systemic risk, requiring systemic preparedness and a systemic response. Traditional business risk management strategies don’t deliver either.
In all fairness to business decision-makers, the responsibility of preparing for and responding to a pandemic has always rested with public health authorities. Given the ruinous business costs of COVID-19, however, and the failure of public health authorities to effectively respond to COVID-19, should business have done more to ensure that the necessary resources were allocated to pandemic preparedness?
The reality here in the U.S. is that we are simply not doing what would be required to get this pandemic under control in the next six months, but less the next four weeks. Absent some kind of miracle, whether a drug that turns out to kill the virus, or an antibody treatment that substitutes for a vaccine until a vaccine is available, it is very hard to see how the U.S. comes out of this crisis anytime soon.
While systemic risk management has not historically been seen as a business priority, COVID-19 has exposed a material business risk that has been ignored. COVID-19 is a wake-up call for business recognizing it has a legitimate risk management interest in promoting readiness for systemic risks like COVID-19. But now that the pandemic is here, what is the role of business in responding to the pandemic?
And here’s where #pandemicwishing comes in, a term that effectively represents the U.S. response to date to COVID-19. We’ve sort of tested. We’ve sort of isolated. We’ve sort of tracked. The President suggested that the U.S. economy would be up and running again by Easter. That date was perhaps fitting, since having COVID-19 under control by Easter would have required nothing short of a public health miracle; it was was #pandemicwishing at its best.
Now the U.S. strategy of self-isolation has been extended to April 30th. But we’re still only sort of testing in the U.S., as compared for example to Germany’s (U.S. equivalent of) 1.4 million COVID-19 tests a week. We’re sort of self-isolating, except for letting people in several states congregate in mega-churches because that’s an “essential” activity. And I have no idea how much tracking is even going on.
The failure of public health authorities to be prepared for the COVID-19 pandemic, after years of warnings from public health experts, will go down in history as an epic policy failure. In hindsight, and given the catastrophic business costs of the pandemic, it also reflects a failure of business risk management foresight and initiative.
But now that the pandemic has arrived, what is the role of business in promoting a response that goes beyond #pandemicwishing, particularly given the potentially catastrophic business implications of a #pandemicwishing based strategy, no matter how much money Congress throws at the problem?
Will companies exercise their considerable power at the state and federal levels to push for an effective pandemic response? Although it requires stepping outside their business comfort zones, it’s arguably the only thing that will save many of them, and the rest of us, from the long-term consequences of #pandemicwishing.
3 April 2020 | Today, the world reels from tragic death tolls and deep disruptions caused by the coronavirus. Country after another struggles to contain and delay the onset of COVID-19 and deliver respite to its beleaguered citizens. This pandemic has stressed the world’s largest health services to breaking point; led to curfews and shutdowns in megacities; brought entire economic sectors (airlines, hospitality, retail etc) to a standstill; and crashed all major stock markets.
However, not all news from this devastating pandemic is bad. For example, it was estimated that lower air pollution in China (from shut factories and less traffic, leading to much lower PM 2.5, the main cause of death from air pollution) could conservatively have saved China 53,000 to 77,000 lives, i.e. more than lost worldwide to the Coronavirus. Positive effects on the natural environment are pervasive: clearer air, cleaner waterways, lower GHG emissions. China’s closures reduced their GHG emissions an estimated 25% compared to the same period last year. But perhaps the most positive effects are still in the making: deep changes in human psyche and culture, in our values and behaviours.
Our new mantra of ‘social distancing’ has accelerated the ‘virtualization’ of our lifestyles. University lectures by stay-at-home professors are being broadcast on Zoom to stay-at-home students. Concerts are being synthesized live from musicians’ parallel video feeds. Socially-distanced family and friends have begun to plan ahead and order similar meals, sometimes from the same take-aways, eating as they web-chat at virtual dinner tables. It is reassuring to see how human ingenuity and technology have found ways to create ‘social proximity’ despite the lockdowns and physical separation. Some of these new patterns might outlive COVID-19.
Our new stay-at-home existence is also bringing back values and behaviours that had been gradually disappearing from our lives. People are reading books, families are eating together, parents are teaching children. There is the apocryphal story of the investment banker who, after six hours of trying to take his children through their lessons, finally understood the invisible value of primary school teachers, and declared that they must all be awarded million-dollar bonuses!
At a fundamental level, we may even rediscover wonder, fear and humility, and accept that the human species is part of a much larger system, the Earth’s biosphere. We may begin to understand that the biosphere of the Holocene (the official name of the geological epoch we’re living in) is actually a finely balanced health system for both human health and planetary health, and that they are connected.
Understanding The Holocene
The Holocene epoch spans the last 11,700 years of the Earth’s history. It began with the end of the last major glaciation, or Ice Age. Nature in the Holocene is a highly complex system in equilibrium. It is characterized by its remarkable stability – the predictability of its seasons, temperature and rainfall patterns – which has made agriculture and human settlement possible and given birth to all known human civilizations. It is also characterized by its resilience: its ability to spring back into shape after a period of serious disturbance… witness the suddenly cleaner air in your city.
For the last century or so, human economic growth has been buffeting this system. We have caused serious disturbances: large-scale deforestation, pollution, climate breakdown. Might it be a mistake to assume that a seriously complex adaptive system, such as the Earth’s biosphere in the Holocene, has no negative feedback-loops, no defensive or adaptive mechanisms, in fact, no means of ensuring that it returns to equilibrium? An unsettling thought arises: might not SARS-CoV-2 be one such mechanism to help the Holocene biosphere neutralize the effects of our disturbances? Or before that, the Spanish Flu of 1918? It is, after all a world of system dynamics, self-balancing mechanisms and feedback loops…
Deep lessons will no doubt be learnt, but for them to lead to a better world, we need to act on them. Bill Gates, in a TED Talk in 2015 in which he spoke about the next global crisis being a virus-caused pandemic rather than a nuclear war, pointed out that the WHO is funded only to monitor epidemics, but not to take actions that prevent or contain their spread. Today, that responsibility still rests with governments and, yes, with citizens: with us.
What Can We Do?
Quite a lot, actually. We can accept scientific advice and collaborate with official instructions (social distancing, washing hands etc). Thinking one step beyond that, we can also learn to avoid the habits that have worsened health outcomes. For example, the main co-morbidities of Coronavirus (i.e. the health conditions that dramatically worsen its effects) are heart disease, lung disease, diabetes and compromised immune systems. And the chief cause of lung disease and heart disease today is tobacco. So, will we now learn not to vape or smoke tobacco? And will banks amd investors finally stop financing tobacco companies?
And perhaps, if we think deeply enough, our most important lessons – and actions – will be about our dominant economic model. This model glorifies markets, and as markets only trade private claims, it devalues public and community goods and services, such as robust national health services. It places private goods on a pedestal above community and public goods which do not have market prices, indeed do not trade in markets. In other words, it gives man-made capital (financial and manufactured capital) pride of place above all other capitals – natural, human or social capital. These other capitals are excluded from accounting frameworks, both at the national level and at the company level. The time has come to correct these design defects in our economic and corporate models.
We should recognize and value non-market goods and services such as nature’s free services (natural capital is the ecological bedrock of our society and economy); relationships and trust (social capital provides the social foundation of commerce and profitability); unpaid labour of home-makers (human capital which makes family life possible). We need to go beyond GDP to measure national economic performance, and the United Nations’ Inclusive Wealth Report does exactly that. In the same way, we need to measure corporate performance beyond profits by calculating Integrated Profit & Loss, covering all four capitals, see www.gistimpact.com.
Scientists have argued that it is time to recognize the advent of a new age, the so-called ‘Anthropocene’: an epoch during which human activity has become the dominant influence on climate and the environment. It is no longer natural phenomena, such as cycles of oscillations of the Earth’s orbit around the sun but rather our economy’s GHG emissions that determine Earth’s climate. The science behind this proposed new epoch is persuasive. However, this phase-change and name-change for the earth system is not a done deal.
The term ‘Holocene’ is derived from two Greek words meaning ‘entirely recent’, indicating that this crucible period of the human species’ stellar success is no more than the blink of an eye in the life of planet Earth and its biosphere. So perhaps the new term ‘Anthropocene’ itself smacks of our misplaced hubris? And perhaps it is better that we reflect on the lesson we have just learnt about the resilience of the Holocene, and leave it be?
Our time might be better spent in adapting our values and behaviours to one-planet living, rather than rediscovering what happens when the Holocene strikes back.
2 April 2020 | COVID-19 has flattened the global economy, and it will hurt countless people before we flatten the curve. That, however, hasn’t stopped some from declaring this human tragedy an ecological “blessing” that could also save a lot of lives if it ends up supporting both national climate policies and the Paris Agreement.
Aside from a shared sense that this tragedy can be harvested for good, however, there’s little agreement on how, exactly, this awakening will happen. Some, for example, argue that our global response to COVID-19, if successful, can provide some sort of nebulous energy for tackling climate change. Others argue that we’ll solve our problems by letting airlines and fossil fuel companies die so we can start from scratch. Neither of these notions really takes stock of the existing “vaccines” and “treatments” already being brought to bear in the effort to end climate change, and that could be a tragedy in itself if it means this moment is allowed to pass.
I’m skeptical of those who argue this crisis will automatically turn climate skeptics into climate warriors, but I do believe this moment can be leveraged to provide more general support to a greener economy and to meet the goals of the Paris Agreement through a more aggressive application of existing economic, governmental, and technological “treatments” combined with the organic behavioral changes we’re already making in response to COVID-19.
Clear Skies and Fresh Eyes
One reason to believe people will feel more motivation to act is that our negative impact on the environment has drastically decreased, and many of us are directly experiencing clean air and reviving nature around us. In China, climate policy has actually historically been driven more by a need to reduce air pollution than to mitigate climate impacts. This already led to more solar energy and less coal-powered energy. In recent weeks, the sky has been visibly cleaner over China, northern Italy, South Korea, and even the United Kingdom, satellite images showed.
Source: The Guardian, nitrogen emissions from China
To be clear, these visible reductions mainly concern NO2 emissions (nitrogen oxide) and not greenhouse gasses, but they come from the same sources that also emit greenhouse gas: power plants, factories and motor vehicles.
Here in the Netherlands, with the high population and roads density and busy airport hub, there was clearly less noise nuisance, less nitrogen, a bluer sky and less CO₂.
Structural Low CO2 Emissions Trend and Available Offsets “Vaccine”
Last year, in the “Urgenda” climate ruling, the Supreme Court of the Netherlands ruled that the government was responsible for reducing the country’s greenhouse gas emissions to a level 25 percent below 1990 levels by the end of 2020 instead of its legally binding 20-percent target – a feat that’s inconceivable without extra expenses. In China, however, CO₂ emissions fell 25 percent, or by100 billion metric tons of CO₂, as a result of the country’s response to COVID-19.
The combination of lower CO2 levels, less capital in business sector and available carbon offsets may offer a welcome vaccine to meet a low carbon economy sooner that we thought. Hence, the deep crisis may teach us not to make climate policy solely a political clash, but a positive and sensible change – a new “business as usual”. Let’s be more pragmatic: the antidote is here!
How do we Make the Change Sustainable?
Trend watcher Li Edelkoort advises us to go through the COVID-19 crisis in a sort of “consumption quarantine” that becomes a “blank page for a new beginning…[that involves] less consumption and less, but cleaner production.”
It’s an admirable ambition, but history shows that this doesn’t happen automatically.
The 2008 financial crisis, for example, also raised hopes for a green re-set, but that re-set failed to materialize. Yes, global CO₂ emissions from fossil fuel combustion and cement production fell 1.4 percent during the crisis, but they rose 5.9 percent when it finished.
This is a pattern we’ve seen after several previous crises, each of which came with declarations of a new, green future.
Previous Crises Also Failed to Yield Lasting Environmental Benefits
Conditional Stimulus: Unused Carrot?
Governments have stepped up to rescue key industries and jobs, but future support should be offered with an eye on accelerating a low-carbon restart. This means attaching sustainability conditions such as the use of renewable energy or adoption of energy efficiency strategies that lead to cleaner air quality and new jobs. The head of the International Energy Agency, Fatih Birol, and the World Resources Institute have already called on countries to put renewable energy at the heart of their stimulus plans to emerge from the crisis.
CO₂ Emissions Trading Systems Support Long-Term Sustainability The turmoil in the financial markets is also impacting emissions trading. The price of an emission reduction representing a ton of CO₂ either kept out of or removed from the atmosphere under the European Union Emissions Trading System (EU ETS) fell in two weeks from €24 to just under €15 euros. In the United States, California Carbon Allowances (CCAs) traded below the floor price for the first time in nearly three years. The Mar-20 V20 CCA contract tumbled to $16.48, a 25-cent drop on the ICE platform because there are fewer CO₂ emissions, and as a result the demand for offsets has decreased. At the same time, companies are unloading allowances and offsets to meet their cash-flow requirements, accelerating the price drop.
We may have low price levels for months into the future, and this will not impact the environmental integrity of these programs for now because the overall budget of allowances will ensure targets are met. Lower price levels make it a bit easier and cheaper, which is also suitable in times of shrinking economy.
The COVID-19 challenge is different from the 2008 financial meltdown because it’s based on a real-world event rather than a structural flaw in the financial system. Because of this, we can expect a rapid recovery once the COVID-19 crisis is over. To prevent an oversupply from accumulating and then driving down prices in the recovery, the EU uses a so-called “Market Stability Reserve” to reduce the number of allowances auctioned. There is simply less auctioning with a surplus, so that the CO₂ price will recover again next year. In California the price floor keeps prices from falling too low as well.
Long-term expectations for cap and trade are still positive, and the European Commission will even propose to increase the CO2 target for 2030 to 50 to 55 percent to comply with the Paris Agreement. This is supported by most EU member states. Ultimately, the number of allowances will decrease, fewer allowances will circulate every year.
Further State Aid is an Opportunity to Make Aviation Sustainable Faster
Let’s take a look at just one sector: aviation. Research agency CAPA expects that without support airlines will go bankrupt at the end of May. Indeed, flights from European airports are down anywhere from 50 percent to 88 percent.
EU and US governments understandably focused their first rescue on life support and job preservation, but I see further state aid as an indispensable opportunity to make aviation more sustainable by promoting the use of cleaner fuels and more fuel-efficient aircraft and practices.
I’m in the camp that believes we’ll fly less in the future as distributed working and virtual conferences become the new normal – in part because we’ve gotten used to it, but also because of budgetary constraints after economic activities begin to pick up.
Governments can anticipate this in their next round of aid packages – insisting, for example, on airlines prioritizing the use of newer, more fuel-efficient aircraft and low-emission fuels. The Dutch national carrier, KLM, already plans to take the old, polluting Boeing 747 out of service – why not insist they do it a year earlier?
We can also make any future aid contingent on reduced future emissions, which any reductions that can’t be achieved organically being achieved by high-quality offsets.
CO2 Vaccines are Required, as Well as Behavioral Changes
In summary, the COVID-19 crisis offers the opportunity to come out greener, but that is certainly not automatic. The parallels are, however, striking.
A vaccine is required for COVID-19 – an inhibitory drug that prevents it from taking hold again – but so are behavioral changes, including better treatment of animals.
For the climate test, “CO2 vaccines” are required, as well as behavioral changes. Airlines can adopt better practices and offset those emissions they can’t eliminate, but we can all fly less.
In this way, we can turn Li Edelkoort’s “consumption quarantine” into something permanent.
2 April 2020 | The 26th Conference of the Parties (COP26) to the United Nations Framework Convention on Climate Change (UNFCCC), set to take place in Glasgow in November, has been postponed due to COVID-19, the COP Bureau of the UNFCCC announced yesterday.
“The world is facing an unprecedented global challenge and countries are rightly focusing on fighting #COVID19. Due to this, #COP26 has been postponed,” UK Environment Minister Alok Sharma announced on Twitter.
The talks were designed, among other things, to finalize accounting rules around international transfers of emission units (Article 6).
This story will be updated over the course of the day.
30 March 2020 | Since the industrial revolution, humans have been driving towards ever greater efficiency. In fact, efficiency – making the best possible use of the resources at hand – has become the core concept of how we run the world.
On the face of it, being efficient makes us more in tune with our environment, by not being unnecessarily wasteful. However, it has in many cases led to a reduction in resilience, the ability to deal with change and crisis.
Unlike humans, nature is more resilient but far less efficient: numerous plant seeds are dispersed just to allow some to germinate, and many animals have extremely short lifespans – both suggest a wasteful use of resources.
The human way can bring insight and foresight to decision making, and we can be proactive. Nature is essentially reactive, but does adapt to changing environments. So how do natural systems build resilience, and how can humans harness it, too? One key element seems to be the natural tendency towards increasing diversity. But from a human perspective, diversity can add complexity and a degree of redundancy.
Diversity is not a bad thing for business. Vehicle manufacturer Peugeot was founded over 200 years ago when there were no cars. Its expertise was in making and processing thin steel, which then took it from producing products such as hand tools and watch springs to bicycles and cars. At each stage, the firm had a range of core products, and added more marginal activities often in response to changes in taste and fashion.
This broad portfolio gave Peugeot the flexibility to shift focus and downgrade core activities to a more marginal role, and vice versa. It has survived by identifying new opportunities in areas related to what it is already doing, often reducing risk by forming new companies or divisions to accommodate such ventures.
Peugeot’s strategy is very similar to nature’s resilience: when the environment inevitably changes, the resulting shifts in conditions – temperature or the availability of food, for example – could mean that previously marginal species suddenly find themselves in the perfect situation. They can then become core species in the new system, while previously dominant species may come to play a more marginal role as conditions are now less favourable for them. As a result, the whole system can survive, albeit in a somewhat different configuration.
If those species that were marginal at first had not been there to take on the key roles, the system would have collapsed. Again, thinking of the automotive sector, those manufacturers who are heavily reliant on diesel, will find themselves in an increasingly vulnerable position in coming years as fuel supplies get low, and new legislation is enforced.
Those who have experimented with EVs, meanwhile, will be better placed – despite the fact that in the past such activities may have been seen as inefficient and difficult to justify. General Motors’ experiments with the EV-1 in the 1990s, for example, garnered negative attention, but the work put it in good stead to later develop its Volt and Bolt electric vehicles.
This type of resilience thinking has become particularly important in recent years, when natural disasters have disrupted human processes. Toyota – often presented as an example of efficiency due to its lean production system – was badly affected by the Tohoku earthquake and tsunami in 2011. In the aftermath, a supply chain audit found that Toyota’s supply chain actually had several potential vulnerabilities due to its efficient thinking. For example, many single suppliers of key components were located in high risk earthquake zones.
In order to add resilience, Toyota encouraged these suppliers to produce components in multiple locations, or store stock away from production sites. The carmaker itself is now moving towards greater commonality of components across models, using parts that can be switched between models while increasing volumes per component – which also makes it easier for suppliers to justify new multiple production sites.
While we can ignore these stories – and this is indeed what we have mostly been doing in our drive for efficiency – particularly at times of change, it may be wise to take a closer look at the resilient way of operating. Some of our systems are by their nature better suited to resilience than efficiency. Healthcare systems spring to mind, or any other system where a rapid response to an unexpected extreme event can be, well, expected.
We are entering a time when our existing systems appear to be reaching their limits in many respects. Our overreliance on fossil fuels or economic growth, for example, are likely to hit natural limits, and if we are not proactive we may well be forced to rapidly adapt to a series of human-induced environmental crises.
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